"We’ve seen a significant spike in calls from advisers whose clients are considering their options, and more specifically considering how to break out of their existing chain."
The property market has rarely been quite this busy. The stamp duty holiday has been an incredibly effective tool in boosting demand despite the pandemic. In fact, according to the latest data from HMRC, there were just shy of 191,000 residential transactions in March, more than double the number seen at the same point a year ago.
All good things must come to an end though, and while the stamp duty holiday has been extended until the end of September, there may be some buyers who are starting to get a little nervous about the prospects of getting their proposed purchase over the line in time to benefit from this tax boost.
And for some, that means turning to a bridging loan.
We’ve seen a significant spike in calls from advisers whose clients are considering their options, and more specifically considering how to break out of their existing chain. Ordinarily they would be happy to wait out a chain that’s moving more slowly than they’d hoped, but these aren’t ordinary times. With a serious deadline on the horizon, these buyers want to get their hands on the keys to their new property as quickly as possible, and that means exploring the alternatives.
Bridging loans can be an excellent option for borrowers in this position. The market is in a great position today compared to just a few years ago, with a significant number of lenders battling it out for a slice of the pie.
The level of competition has brought with it all sorts of benefits, for advisers and borrowers alike. Obviously, lenders have had to cut their rates, making bridging loans far more forgiving on a borrower’s budget, but it has also sparked true innovation among lenders in the way they design their products.
The days of vanilla bridging loan product design are behind us - these days, the best lenders have designed different products to meet the needs of borrowers in all sorts of different circumstances, from property investors hoping to refurbish an out-of-date property to residential buyers considering breaking their existing chain.
But understandably not all advisers are comfortable handling bridging loans, given that for many they are something that crops up as a realistic option only occasionally. That’s where picking the right partner can pay dividends.
Working with an experienced packager is often a sensible step for advisers, but the benefits have never been clearer than in the current marketplace. Packagers are perfectly placed not only to help identify the best product for your client but are also going to have an up-to-date insight on the service levels of the various lenders, as well as the paperwork and information needed from the outset.
Given the current market, bridging lenders are incredibly busy. Thankfully, this is a fast-moving market generally, so that doesn’t have to be an issue, but it does mean getting the application right the first time is extremely important. Again, this is where quality packagers are worth their weight in gold. They can guide you and the client, ensuring the application meets the lender’s exact requirements from the very beginning, removing the need for a time-wasting to and fro as you strive to get things right later on.
Partnering with the right firm means more than simply flagging up the lowest interest rate on offer but going the extra mile in terms of identifying the lender’s best placed to deliver fast funding, as well as ensuring borrowers know what they need to produce in order to get that case over the line as quickly as possible.
Chain-breaking is only going to become more tempting as an option as we get closer to the stamp duty holiday deadline(s). Therefore, it’s crucial for advisers to think now about who they are going to partner with and who they trust to do the best by their client if they feel a bridging loan is the right solution.