More borrowers used bridging loans to prevent chain breaks in 2023

Aaron Strutt Image

Demand for bridging finance remained strong throughout 2023 according to MT Finance’s latest Bridging Trends survey.

As borrowers faced uncertainty in the mainstream mortgage market after 2022’s mini-budget, many turned to bridging finance to save their property purchases.

Bridging loans are often used when homebuyers do not have the funds to complete their purchase on time or the sale of their property will not happen quickly enough to complete an onward purchase.  

How Trinity Financial can help 

Research of the specialist finance market by MT Finance shows the most popular use of a bridging loan in 2023 was to prevent chain breaks, increasing from 20% in 2022 to 22%.

This surpassed funding the purchase of an investment asset – 2022’s most popular use of bridging loan – which fell from 23% to 20% year on year. Elsewhere, demand for auction finance, regulated refinance, and re-bridges increased slightly compared to 2022.

While taking bridging loans to save a property purchase transaction from falling through was the most popular reason, investment property purchases were the second most popular reason for using bridging loans with 20% of transactions.

The subsequent most common use for bridging loans was to carry out heavy property refurbishments with 11%. The remaining uses included auction purchases at 7%, refinancing existing bridging loans at 8% and general business purposes at 9%.

The average bridging loan rate was 0.87% per month

MT Finance's report shows the average monthly interest rate borrowers paid for bridging loans was 0.87%. The average loan-to-value has remained at 57%, and the typical completion time was 58 days. These loans typically lasted for one year.

Aaron Strutt, product director at Trinity Financial, says: "Bridging loans are generally considered as a way to get cash quickly and "bridge the gap" between buying a property while waiting to secure a mortgage or funds generated from a property sale.”

"One large provider offers bridging rates between 0.65% and 0.85% per month up to 75% loan-to-value. It has a 2% completion fee and is available for loans between £100,000 and £5,000,000. The price gets marginally more expensive if you have a smaller deposit."

How Trinity Financial can help

Trinity Financial has access to bridging lenders offering a range of products. We understand that each case is unique, and people are in various situations.

Many lenders offer bridging loans, and the rates and setup fees can vary greatly. Our brokers can access a private bank offering bridging loans linked to the Bank of England base rate and relatively low arrangement fees.

Article source: MT Finance

Call Trinity Financial on 020 7016 0790 to secure a bridging loan, book a consultation, or complete our mortgage questionnaire

The information contained within was correct at the time of publication but is subject to change.

Most Buy-to-Let Mortgages are not regulated by the Financial Conduct Authority.

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