More buy-to-let landlords turn to bridging finance

18 01 2017

belvoir-bridgingfinance

The Bank of England’s decision to crack down on buy-to-let lending through the introduction of tighter borrowing rules and stricter affordability tests mean that increasing numbers of landlords are turning to less conventional forms of finance in order to carry on investing in the buy-to-let market.

According to the findings of a new Broker Sentiment Survey, conducted by bridging loan lender MTF, 84% of brokers were unable to source a buy-to-let mortgage for some of their clients in the final quarter of last year, with more than a quarter – 27% – attributing affordability as the main barrier.

One in five of the brokers surveyed said they were unable to get buy-to-let mortgages for clients with adverse credit and equally, 20% blamed consumer buy-to-let regulations.

But while buy-to-let lenders deal with the latest interventions by the Prudential Regulation Authority, business in one often-overlooked corner of the market is currently booming.

Demand for bridging loans – short-term secured loans designed to bridge a temporary cash shortfall when acquiring a property – has surged, as reflected by this latest poll.

The study found that 69% of brokers opted for bridging finance after being unable to raise a buy-to-let mortgage for their clients in instances where time is of the essence. Some 8% of brokers opted for secured loans as an alternative.

Bridging loans were once perceived as a ‘last resort’ lending option. But with a growing number of borrowers attracted to the greater flexibility offered by alternative finance providers, including no minimum term and no exit fees, it is now expanding fast, with 31% of brokers noticing a rise in bridging loan volume in Q4 2016, up from 13% in the previous quarter.

The South East saw the biggest demand for bridging loans in the UK at 50%, up from 29% in Q3.

 

written by .landlordtoday.co.uk/

 

For Mortgage advice speak to the Belvoir Stoke team on 01782 767065 or click here: Mortgage advice 

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