Bridging loans are not boring, they make dreams come true everyday
By Hannah Duncan -
After a weary day of drab property searches, my partner and I trudged back to our rented flat. It was May 2020, at the height of the lockdown but before the stamp duty holiday.
For no particular reason, perhaps to cheer ourselves up, we opted for a more scenic route than usual. It would be a life-changing detour.
We redirected our journey, winding along cobbled villages and shaded by age-old trees, bit by bit, climbing higher on top of London.
Then we saw it. A beautiful art-deco mansion came into view. Surrounded by carefully pruned rose bushes, with striking red brick architecture, it was perfect.
Each flat and balcony that made up the giant complex looked idyllic, with huge spacious windows and impressive looking inner grounds.
It was one of those rare times in life when all the stars aligned. As luck would have it, one of the beautiful flats was for sale. By the time we arrived home – barely one mile later – we’d already sent an email to the estate agent.
I could never have imagined that within just a few months we’d become the proud owners of the flat.
And it was all thanks to a bridging loan.
After moving in, commissioned a local artist, Ben Farleigh, to draw our dream property. We still can’t believe it!
Shifting priorities over lockdown
Over the lockdown period, searches for properties in the country surged by a whopping 78%. Like so many others, the owners of our dream flat had decided to up sticks and get out of the rat race.
They’d headed to the countryside where – our estate agent told us – they were enjoying a better quality of life in a large family home.
After all, while a cosy North London flat might be great for the cosmopolitan life, it made for cramped living during a national lockdown.
The owners had purchased a new home before selling their original. Years of writing financial content had taught me that meant one thing… a bridging loan.
People, even within our industry, sometimes yawn at bridging finance. Stale old numbers drop out of reports like crumbs, and the content can be so dry you practically need a litre of water handy to digest it.
However, a bridging loan made my dream come true. It changed my life.
Over the four months it took for me – as a self-employed freelancer – to get a mortgage on a London pad, that bridging loan kept everything afloat.
Without it, we would have been lost. It prevented all the parties involved from sinking and missing the deal. We forget that it’s called a bridging loan for a reason. It stops so many people and businesses from going under.
Bridging loans help prevent people and businesses from sinking
Bridging loans are awesome
So, I’m going to say it, load and proud: Bridging loans are awesome. They offer the cash injection needed for the housing and property market to continue moving.
They fill in any weak links in the chain, keeping solicitors, surveyors, architects, builders, brokers, site managers and many more employed.
They give people the chance to become property owners, which for the majority of us is so much more than just an asset, it’s our security – our source of pride. And yep, they make dreams come true too.
But it’s not just my dreams that came to life. There are 29 million homes in the UK. Each with their own story, their own chain of finance. And more likely than not, a bridging loan will appear somewhere along the journey, making the impossible, possible.
There are 29 million homes in the UK, each with their own chain of finance.
Stamp duty cuts increase bridging loans
The start of the year, unfortunately, saw a huge dip for bridging loans. Across 2020, it’s estimated that just £455 million of bridging loans were transacted in the UK.
The main purpose of these loans was to either buy an investment property or unlock cash to buy a home. Believe it or not, this is actually much less than in a normal year.
As chaos descended upon the finance industry, bridging lenders pulled back dramatically.
However, the stamp duty holiday which was announced in July changed everything. They ignited a surge of house sales, which in turn brought a soaring increase in the number of bridging loans.
KIS Finance reported a staggering 121% increase in bridging loan enquiries. And between November 2020 and February 2021 the experts saw a giant 33% leap in approvals. The stamp duty holiday brought about a surge in bridging demand.
Now that the holiday has been extended, we could expect to see more and more people buying up homes and fulfilling their dreams.
When bridging lenders approve loans, they transform lives
More bridging loan dreams to follow…
From narrow boats to country mansions, bridging loans help all kinds of people to achieve their ambitions and own a property.
They also help to keep people employed. As a freelance writer myself, I know first-hand how one missed invoice can cause a riot of chaos.
Everyone, from the architect who draws up the property, to the gardener who prunes the bushes needs to be paid reliably.
And it’s often thanks to the unsung heroes of property and housing – bridging loans – that chains stay unbroken, and bills get paid.
When the housing market stays afloat, we stay afloat.
As the stamp duty holiday extends, we can surely expect to see more bridging loan finance on the horizon. More people fulfilling their ambitions of owning a Devon cottage or a city pad. More workers getting paid on time. And more dreams becoming reality.
Not all heroes were capes, but a few of them carry bridges.