The bridging market continues to deliver on helping clients achieve their goals in the property market.
As a newly launched lender in 2023, Consumer Duty was embedded in our service ethics, which is evident in our commitment to helping consumers and commercial developers find the regulated and unregulated finance they need, often under time pressure.
Education is key to spreading the message that bridging loans can be an essential tool for clients in the right circumstances. There are so many reasons to use bridging finance.
A chain break in a residential sale is a classic scenario where bridging finance should come to mind. For instance, when a client has already fallen for a ‘dream home’ but hasn’t sold their current property, a short-term loan could keep those hopes alive.
Alternatively, a client may have found the right property, but it’s unsuitable for a standard mortgage—perhaps it’s missing a bathroom or a kitchen, for example. Short-term finance allows them to refurbish the property to meet term mortgage standards and even go further if they wish, enabling them to refinance or prepare the property for sale.
Many professional landlords have been taking advantage of current market conditions to buy properties at good value and refurbish them to add further value. A bridging loan works well here for the short-term work required.
At StreamBank, we offer both regulated and unregulated property and development loans. Over the past year, we have helped numerous clients raise capital for all property types.
AUCTION FINANCE OPPORTUNITIES
In the UK, online auctions, pent-up demand post-Covid, and rising numbers of repossessions are driving interest in residential and commercial auction purchases. Two- and three-bedroom properties, as well as commercial office buildings, continue to see strong demand as workers return to offices post-Covid.
Property developers keen to flip their purchases, much like the investors on Homes Under the Hammer, can benefit from the quick release of bridging finance. Bridging lenders can act swiftly to meet the 28-day turnaround often required for auction purchases.
Reflecting society’s evolving needs, developers are frequently seeking fast finance to enable property use changes. Across the UK, investors are turning pubs into residential flats, hotels into assisted living facilities, and even embarking on ground-up builds.
In many situations, short-term finance answers cash flow needs until the deal is ready to be let, moved onto term finance, or sold.
REGULATED VERSUS UNREGULATED BRIDGING
It’s important to understand the distinction between regulated and unregulated bridging. Essentially, it is defined by the property’s use. If the security for the loan is a main residence, a property in the borrower’s own name, or a property the borrower intends to live in, it’s regulated. If the property in question is owned by a company, it’s unregulated.
There are exceptions, as with many things in life. If the property will be lived in by a dependent or close relative, it qualifies as a regulated bridging deal. Generally speaking, all buy-to-let deals are unregulated unless the borrower is an ‘accidental landlord’—for example, someone who inherited the property before deciding to let it out. This would then be classed as a consumer buy-to-let and therefore regulated.
Similarly, if the borrower is capital raising on their main residence via a second charge for business purposes, this qualifies as a non-regulated bridging deal.
From a risk perspective, the principle is that if your own home is at stake, borrowers should rightly seek advice from an authorised broker with regulated permissions. This ensures all facts are presented, and a regulated bridging route is followed. Borrowers should always be made aware of the risks involved.
Whatever the deal type, at StreamBank, we compete harder than anyone on product and service to achieve superb customer outcomes.
