"Bridging finance can offer a quick solution to help customers bridge the gap over the current back log, or if the property chain has broken due to purchasers withdrawing."
However, the increasing anxiety of those in the middle of – or wanting to – purchase a home before the deadline could be reduced if the option of a bridging loan was considered.
The initial effects of the first lockdown saw the country all but close - however as restrictions eased towards the end of the year, mortgage advisers saw a massive uplift in purchase activity. This was spurred by the increase in the stamp duty holiday which amplified the confidence of both buyers and sellers.
This unseasonal uplift in property transactions does however cause an issue, which is on the near horizon and approaching at a pace. Many customers currently in the process of buying will be apprehensive of completing the transaction on their homes ahead of the stamp duty holiday ending on 31 March.
We’re all aware of the servicing issues amongst lenders and solicitors; as this bottle neck continues to grow, anxiety levels will further increase. This is by no way a dig at the lenders or the solicitors, it is a by-product of a UK government tax incentive, alongside a major pandemic, which has seen lenders having to process payment holidays, review lending criteria to fit a changing market and in some cases switch to a more manual underwriting process. Solicitors have also seen a longer processing time for items such, as necessary searches when buying a property.
If not doing so already, I would urge mortgage advisers to manage the expectations of their customers and perhaps discuss measures for alternative solutions if they want to complete before the stamp duty deadline.
Bridging finance can offer a quick solution to help customers bridge the gap over the current back log, or if the property chain has broken due to purchasers withdrawing.
Plus, don’t despair if a lender pulls out of a transaction due to lack of market confidence - bridging could prevent the sale from falling through and keep your customers on track to move into their new homes.
There is much demand for Government to extend the stamp duty holiday to allow the backlog of applications complete and prevent people from being able to benefit from the initiative. However, we would like to reassure mortgage advisers there are solutions available if the deadline isn’t extended. With so much uncertainty around us at the moment, it’s important people are fully aware of all the options available to them.
It is advisable to act now though and prepare for any further change in the market, which could also mean other lending solutions may need to be considered. Let’s face it, in this current climate, it wouldn’t be unheard of.
