4 minute read
Overview
At Together, we’ve been providing specialist finance for close to 50 years, using our wealth of expertise and industry knowledge to help customers reach their property ambitions.
We arranged our first bridging loan in 1985, and since then, we’ve provided more than 60,000 of them worth over £7bn—so we think we’ve got it down to a fine art. Our experience, more than anything, has allowed us to consistently deliver great service and flexible finance at speed.
So when your clients need to solve a cashflow problem, or take advantage of an unmissable opportunity, you can count on our capable team to make informed, commonsense decisions in the timescales they need—however complex their situation.
Since we provided our first bridging loan all those years ago, the world has certainly changed, perhaps more so than ever over the last 18 months.
But what’s clear is that investors, businesses, landlords and developers are still looking to bridging finance to support their property goals; the need to get back on track has driven huge demand in short-term lending over the last year as the nation races to get back to normality.
Recent statistics from Mintel suggest the bridging market has indeed bounced back, and is estimated at £7.7bn in 2021*. And at Together, we’re on track to exceed our short-term funding volumes in 2021, compared to 2019.
Safety net, or casting their net?
Following the pandemic, business owners have sought bridging finance to solve cashflow issues. For example, to bridge the gap between needing to buy new stock, and waiting for a customer to make a large payment (who may well be struggling with their own post-pandemic finances).
COVID has also impacted the building industry. With high demand for trades and material shortages causing serious delays, developers may choose to exit their development finance
arrangement onto a lower cost bridging loan – giving them more time to complete their project.
Others have looked to bridging finance to use not as a safety net, but to let them to cast their nets wider, and take advantage of new-found opportunities following the pandemic. Thanks to a surge in demand and properties very rarely spending long on the market these days, bridging loans can effectively turn customers into ‘cash buyers’, allowing them to move fast so they don’t miss out on any great deals.
We’ve seen more customers investing in holiday lets, thanks to the nation’s current staycation boom. And a noticeable increase in investors looking to ‘flip’ over the past year, seeking a bridging loan to ensure they can snap up a property and quickly refurbish it, before selling it on. Invariably, property investors opt for specialist lenders like us to make this process as slick as possible.
The Government’s stamp duty freeze also undoubtedly played a key part in the bridging market’s recovery, due to those looking to complete in time to make the saving (for the original deadline in March 2021, and its extended phase out over the summer).
Our headlines from the last 12 months
To support a wider range of customer needs, we’ve made some important changes to our business, including cutting our bridging rates and increasing our maximum loan sizes and LTVs**.
At every step, we’re also very conscious that we have two customers: borrowers, and our broker partners. Both have service expectations that it’s vital we meet, and we’ve made a number of enhancements to our processes over the last twelve months to create better outcomes for both. For example, we’ve changed some of the fields on our My Broker Venue portal, making it more user-friendly. We’ve widened our use of automated valuation models (AVMs), and now around half of our residential property transactions are completed with a Hometrack valuation in minutes—digitally. And towards the end of 2020, we launched E-file, a new piece of secure electronic filing software to hold and automatically sort every document involved within the underwriting process. It recognises a passport as proof of ID, a payslip as proof of income, and so on – allowing us to be faster, smarter, and near-paperless too.
The outlook for 2022
The latest predictions from Mintel reveal the UK bridging market will continue to grow over the next five years, with annual growth forecast to be between 10-12%*. And as Britain recovers from the pandemic, we’re anticipating ever more complex scenarios and borrower needs over this period, requiring the expert hand of specialist lenders’ underwriters.
In addition to a continuation of the trends we’ve already seen this year, we may also see more bridging loans used to fund the purchase of larger properties for converting into HMOs, or old commercial buildings, such as disused offices or shops, developed into modern homes – thanks to a relaxation in Permitted Development Regulations.
The changes we’ve made over the last year will help us meet Britain’s ambitions in a way that is simpler, faster, and more accessible – helping our intermediaries provide the best possible outcomes for their clients.
For professional intermediary use only. *Source: Mintel Bridging Report September 2021 **Subject to affordability criteria being met.
