Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With Fincrew.my - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Why BITCOIN NEW ALL TIME HIGH Changes EVERYTHING! - 22nd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Will Bridging Loans Grow in Demand and Usage in 2019?

Personal_Finance / Debt & Loans Mar 22, 2019 - 05:57 AM GMT

By: Boris_Dzhingarov

Personal_Finance

Bridging loans are often seen as commercial loans to cover a temporary funding shortfall or a delay in funding. They’re also useful for a variety of other situations like a delayed mortgage closing or buying a home at auction too.


The Association of Short-term Lenders shared in a report that UK bridging loans grew by over 20 percent from October 2017 to September 2018. Clearly, property investors, flippers, and redevelopers of older properties are seeing a real benefit with using bridging loans.
Will bridging loans grow in 2019? Let’s consider this now.

How Do Property Investors Use Bridging Loans?

Bridging loans are there to provide short-term financing. They are often used for a loan while waiting for development funds to come through, which allows a developer to move ahead sooner with a property restoration project.  It can also allow for the purchase of properties opportunistically at auction too.

Imagine that you’re selling one property and waiting for the funds to clear. You visit an auction and spot a house that you’re interested in. The problem is that a deposit for the property is 10 percent of the winning bid and there is only four weeks to find the other 90 percent. To get a mortgage in that time, especially on an older property that’s required to clear a property inspection, is next to impossible. In this situation, a bridging loan is an ideal solution.

A website like bridgingloans.co.uk can help locate a suitable lender that will be willing to make such a loan to back the purchase.

Are Property Investors Strictly Buy-to-Let or Opportunistic?

It used to be that UK property investors aimed at the buy-to-let market because it was fairly simple. This left the professional property investors who did it for a living to put their time into the development, restoration, auction purchases, and so on. However, that’s now all changing.

In many property markets, there are too many buy-to-let investors. People have fallen in love with owning rental properties. As a result, the rental yields have come under pressure as property prices have risen. Cash flowing a property, especially one with debt attached to it, is more difficult now.

Extra profits must be found elsewhere to augment returns. For more adventurous private property buyers, they’re seeing fewer bargains in local markets and have increasingly been looking for new opportunities. Because of this, conventional fodder for property companies is now fertile land to plough for investors on the hunt for a bargain to boost their total returns.

Using a Bridging Loan? Know When to Exit

Bridging loans are never supposed to be used as long-term property financing. This isn’t their purpose. That’s what a mortgage is used for. When needing short-term funding for solid properties, plan for the bridging loan you need and where the replacement funding will come from to repay it on time. Doing so avoids paying more than is necessary in finance costs and keeps you on budget too.

As the interest in property investing as a way to diversify away from the stock market continues, investors use bridging loans to cover funding gaps. This way, they can grab that bargain property at auction and know they can secure it before another eager buyer does.

By Boris Dzhingarov

© 2019 Copyright Boris Dzhingarov - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in