Bridging has evolved exponentially in recent years. Ten years ago, bridging finance and its benefits were not widely spoken about, it was seen as a product for the experienced investor who faced a cash shortfall or those that had used bridging finance before.

Fast forward to today and bridging is now viewed as an effective financial solution for a much broader audience.

The current market conditions amidst a backdrop of uncertainty has played an important part in showing the opportunities that bridging finance can provide.

It will come as no surprise when I tell you that the past twelve months have had a profound impact on the property market.

The Stamp Duty Holiday has encouraged buyers across the market to take their next step and cash in on the government incentive and bridging finance has had a key role to play here.

From urgent auction purchases to helping with chain breaks or downsizing, bridging loans have helped people up and down the chain to secure their property quickly and make the most of current savings.

DIY nation

Spending more time at home has also turned us into a nation of DIY-ers, with homeowners starting home projects from having new kitchens installed to overseeing full-scale extensions or restorations.

Bridging finance can be used to fund both light refurbishment or heavy structural changes so has provided the residential market with the opportunity in recent months to fund these projects in an alternative way.

Professional landlords

Bridging finance is also a useful tool for professional investors and landlords who are looking to maximise their asset’s potential.

One example of this is a developer who owns a portfolio of commercial space and wants to adapt the property into residential housing instead.

The death of the high street has been widely reported but the move to working remotely during the pandemic has also left office space in a vulnerable position.

For landlords who own a considerable portfolio of commercial space, it is essential that they can quickly develop their properties into more usable spaces for the future.

Efficiency

One of the real differentiators for bridging when compared to other, more traditional finance options is the speed in which investors are able to access capital. In situations where mainstream lenders may need borrowers to fall within certain criteria and won’t loan against larger and more complex projects, bridging can be the specialist solution.

Short-term lending comes with the assumption that it is outlandishly expensive, but the market is currently very liquid meaning that competitive rates with flexible repayment options are increasingly available to clients.

Shawbrook Bank offers bridging loans with transparent costs, no hidden fees or default interest which helps clients to understand from the outset where they stand.

Previously, once a client had taken out a bridging loan for a short-fixed period, that would be the end of the relationship with the lender, however we are now able to provide a cradle to grave solution for our customers.

What may begin as a bridging loan can now smoothly transition into a longer-term offering such as buy-to-let mortgage.

Establishing a clear exit from the outset is an essential part of any loan package and allows for a quicker and cheaper process in the long run, with clients not having to re-negotiate a year or two down the line.

For a professional landlord or investor, knowing where you stand and having a clear solution in place from day one allows you to plan for your next step. Whether the aim is to let the property out or sell to raise funds for your next project, the cash flow benefits of bridging are clear.

At Shawbrook we work closely with a panel of specialist broker partners to find effective solutions for their clients from bridging to second charge.

We work closely with the broker to gain a deep understanding of their client’s immediate and longer-term priorities. We’ve seen a significant uptick in the number of clients looking for a bridging loan but with little thought around the next steps.

It is our role to ensure that customers feel supported from the beginning, working with them to understand what the future holds even when they may not know it yet.

Gavin Seaholme is head of sales at Shawbrook Bank