In the midst of a global pandemic, the UK property sector has seen one of its best periods in almost a decade.
Spurred by stamp duty tax breaks and government-backed mortgage schemes the property market is booming.
According to Nationwide, house prices soared 10.9% in the year to May, the highest level in seven years and the average house price has risen to £242,832, up £23,930 over the past twelve months.
Popular property portal Rightmove, say that they are witnessing the fastest-selling market that they have measured since their records began. Tim Bannister Rightmove’s Director of Property Data said “Wednesday 7th April set a record of over 9.3 million visits to Rightmove, and March saw time spent on the site surpass two billion minutes in a month for the first time. Almost one in four (23%) properties that had a sale agreed in March had been on the market for less than a week, which is also the highest rate that we’ve ever recorded.
The NAEA Propertymark has reported there to be 16 buyers for each property currently on the market. The number of properties achieving over the asking price reached 32% in April 2021, smashing the previous high of 19% in May 2014.
With demand skyrocketing it is no surprise to see that property investors and developers are turning to bridging finance to help secure their next purchase.
Data from the Association of Short-Term Lenders (ASTL) shows the demand from consumers and businesses to get a bridging loan in the UK has increased at the start of 2021. Applications have exceeded pre-pandemic levels by just over a quarter and the value of these was up 18% comparing Q1 2021 to the same period in 2020.
How Bridging Finance Can Help
Bridging loans are much faster than ordinary mortgage products, they can take days to complete rather than months like standard mortgages.
Property investors and those wanting to take advantage of the stamp duty tax break are using fast bridging finance to meet the June 30 stamp duty holiday deadline.
According to data from Bridging Trends, chain break finance was the top reason for using bridging loans, making up 20% of all deals in Q4 2020. With an unprecedented number of property transactions taking place it is inevitable that people may pull out of purchases late on, and therefore clients need a short-term loan to fill the gap their buyer left behind.
Another popular reason to use a bridging loan is to renovate a property for later sale or for rental. Some types of work and property condition may be outside of a traditional mortgage lenders criteria, while a bridging lender is usually happy to accept development projects if there is a clear plan to repay the debt before the term ends. 33% of bridging loans in Q1 2021 based on Bridging Trends data were for business purposes or investments.
If you are considering a bridging loan and would like to discuss the various options available, please speak to our expert mortgage brokers on 020 3645 4322 or send us an email via firstname.lastname@example.org.