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Innovation in bridging finance

Gary Bailey MS blog

This year has witnessed significant growth in the world of bridging finance. There can be no question that the industry is thriving as the trade press is regularly filled with industry success stories and reporting an increase in the number of bridging deals – news of course welcomed by the industry.

The success we have witnessed in the last 12 months is a tribute to how both brokers and investors have developed a better grasp and understanding of the benefits of bridging finance, in particular extending their possible uses beyond bridging the gap between a property purchase andsale of property.

It was recently reported that over 80 per cent of brokers have used a bridging loan for something other than this classic bridge.

All signs indicate that brokers and investors are beginning to realise that bridging loans can be used for many different and varied purposes.

From capital raising to solving short-term cashflow problems, the range of uses bridging loans extend from site acquisition, auction purchase, corporate recovery, fulfilling tax demands, cash injections, stock purchase, propertyrefurbishment, chain breaking, the list goes on.

Bridging is an incredibly flexible product, in the right circumstances of course.

Offering it instead of a longer-term loan for reasons such as a quick fix financially, without a full view of the purpose, affordability and exit, is certainly not the way to make sure that the market’s growth is sustainable.

It is great news that brokers are beginning to be innovative in the uses of such loans but it is paramount that this innovation occurs within the perimeter of the specific needs of the customer, requirements of the loan and, of course, a carefully planned exit strategy.

For me, as long as brokers continue to think outside of the ‘classic bridge’ and lenders provide the right suite of products to support this demand, the growth of the industry will continue and diversify. 

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