Lenders have cracked down on buy to let finance and with new affordability rules coming into play it’s now more difficult to find a lender who says “yes” when you apply for a mortgage. Some landlords have enough capital to be able to purchase properties for cash, but for everyone else, a mortgage is the only way…or is it?
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Many brokers are turning to other means to secure finance for their clients. One area that landlords don’t often consider is bridging finance, but under the right circumstances, it could be the solution.
Use of Bridging Loans on the Rise
Research carried out by a leading lender found that demand for bridging loans in the South East shot up from 29% to 50%. Whereas bridging loans and other secured loans were once the finance solution of last resort, it’s now a mainstream way to fund purchases, improvements and development projects. As a result, 75% of mortgage brokers reported a rise in this type of loan in 2016.
Bridging loans are usually used as a short-term finance solution where time is of the essence. Completion times from initial application to lender decision are much faster than a conventional mortgage, so if you need money to buy a property at auction or you want to refurbish a property, a bridging loan could be the answer. However, this type of loan is not for everyone and it is sensible to seek the advice of trusted mortgage broker if you need finance to buy a rental property.