15 Jan Second Charge Bridging – Are The Lenders Disappearing?
Whether you are based in Cardiff, Birmingham, Glasgow, or Dublin, there will be property that needs to be financed outside of the conventional norms.
This can be because there is high pressure to close the deal. With competitors lurking like vultures ready to snap the opportunity from you, you may want to act quickly and decisively. Second charge bridging is often the route to take.
Frequently, there is something that is holding up the process. Individual home buyers could be waiting for the settlement of their current home sale. It’s even possible that their current property has not yet been sold. A second charge bridging loan is needed. And urgently.
Second Charge Bridging
This kind of bridging, however, only takes place when there is sufficient equity in a property to support the lending. Finding a lender to provide finance for this kind of situation is not as simple as walking into a high street bank.
Most lenders that will offer second charge bridging will be non-status lenders and will take less interest in your credit history and details of income. They will, however, take a far greater interest in the property itself. The worry is that as Brexit approaches are these lending sources going to dry up?
Are Bridging Lenders Drying Up?
Most bridging lenders borrow from wholesale banks and then pass the tight terms on to their customers. The very nature of bridging loans means that the margins are cut very thin.
For the lenders, this kind of lending can become difficult as economic seas become rough. To catch up on the current housing shortage, the UK needs to build 250 000 new homes every year. In 2015, only 143 000 were built.
The four wholesale banks that provide the finance for second charge bridging lenders have been reviewing their position and winding back on this type of lending.
Rather than cause a shrinkage in the market for second charge bridging, it appears they may, in fact, have created a void that other non-conventional investors are willing to fill.
As Brexit draws closer, the property market may be flatlining in some areas. It, however, hasn’t fallen through the floor as some pessimistic forecasters suggested it would.
The availability of bridging loans remains a feature in the property market. It, in fact, may well be the financial product that keeps the market going. This bodes well while we negotiate our way through the economic uncertainty that many feel over Brexit.
Economic History Suggests Differently
In fact, the demand for bringing loans has increased since the Brexit vote. This may well be an indication that investors have faith that the market will grow again steadily once the dust has settled.
When we look back at the financial crisis of 2007 and 2008, retail mortgage deals dried up rather quickly. This left the market ripe for second charge bridging lenders to take the opportunity to keep the property market afloat.
When things became more difficult economically, it would seem that bridging lenders flourished. Bridging lenders do, however, need to assess their customers’ situation. This is to ensure they will not get into financial difficulty during the duration of the loan. Typically, a period of between one month and one year.
The economic circumstances that demand the necessity for bridging loans create unexpected byproducts, however. Terms that were unacceptable yesterday will become completely acceptable today, just to get the loan.
To explore the best possible terms for second charge bridging, you will need a reputable and experienced broker. Although based in London, Belgravia Property Finance provide advice and support for properties throughout the UK, including Scotland and Northern Ireland.