Short term bridging finance still only championed by specialist sector

It’s hardly a secret that lending to individuals is on the up. Generally speaking lenders and their operations are getting slicker as they look to lend in larger volumes.

Richard Deacon
10th March 2014
Richard Deacon - Masthaven

However, while the mainstream mortgage market continues to capture the headlines, many specialist sectors are also gaining traction, resulting in a fair share of envious glances being cast from a number of the big banks. And with increased competition cutting mainstream lending profits to the bone, it is little wonder.

Inevitably the emergence of a variety of specialist sectors will see increased speculation over market moves being made by larger lending institutions to maximise any untapped potential. Indeed, one such arena on the rise and on the radar could well be development bridging finance. Development finance is a sector, like many others, which has undergone significant changes in recent years. But let’s not dwell on times of lenders pulling out of the market or funding lines running dry. Instead, let’s remain firmly in the present, where despite some increased appetite amongst High Street banks, it is the emergence of smaller, nimbler specialist lenders, which are bringing this sector back into prominence.

This is mainly thanks to a more personal approach and tailormade solutions through both the funding stage and the development process to ensure that building works can be completed within the specified timeframes. It’s fair to say that the majority of larger lenders are still not generally agreeing to finance smaller projects and will only entertain lending proposals on finished developments, at which point they will be more receptive to providing long term commercial finance to enable the developer to repay the bridging loan.

The fact is that development bridging finance is an area of the marketplace which, if you’ll pardon the pun, remains underdeveloped, and one in which brokers need further support and choice regarding solutions. Now more than ever brokers are looking to bridging finance companies to bridge the gap between true development and bridging finance. Although this remains quite a challenge for them and the client, it’s clear that demand remains strong.

In the first few months of 2014 we have already seen a large upturn in the number of downsizing bridging loans, self-development bridges and refurb bridges that High Street lenders continue to ignore. Strong relationships are being forged with brokers every day on the back of this personal level of service and flexibility.  Specialist lenders are certainly no longer being cast as an ‘alternative’ to larger lenders, but as the first port of call.

So ensure that you fully investigate all angles for development enquires to get your clients looking beyond the closed doors of the High Street as the options are out there.

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