When it comes to property purchasing, bridging finance has become a popular tool for those seeking to quickly complete on a transaction without delay. A bridging loan for a property purchase ensures that prospective homebuyers do not risk losing out on a property due to the time delays typically encountered from mainstream lenders.
This form of finance could prove particularly useful in light of the recent rise in the base rate of interest. With the Bank of England increasing interest rates to 0.75% – the highest it has been in close to a decade – the financial burden placed on homeowners paying off a variable or tracker mortgage has now increased. Their monthly payments will now rise, and banks are likely to become more cautious when it comes to approving mortgage applications.
The stringent lending measures that have been imposed since the onset of the financial crisis ten years ago have made it tough for people to access finance from high street lenders, and this latest rise could make it more difficult for people to successfully acquire a mortgage from a bank. Thankfully, the rise of alternative finance options such as bridging loans offers new ways for prospective homebuyers and property investors to overcome the delays and bureaucratic processes employed by high street banks.
MFS in Action
MFS regularly assists its clients who cannot complete on a property purchase due to delays in acquiring finance from a traditional lender.
Recently, we were approached by a new client who had recently exchanged on three property purchases in South East England but was at risk of losing out on these lucrative investment opportunities due to delays in acquiring finance from a traditional lender. The client was in need of fast finance to complete on all three acquisitions; failing this, they risked losing their deposit.
Once receiving the initial inquiry, MFS acted swiftly to ensure the client was able to complete on the property purchases and prevent the loss of their deposit. We contacted our panel of surveyors and arranged for a valuation of all three properties a day after the inquiry was made. We assessed the market value of the asset being offered as security to be £1,000,000, and agreed to issue a loan valued at £580,000.
By working quickly with our solicitors and surveyor, MFS was able to issue the loan needed for the client to complete on all three property transactions and expand their existing real estate portfolio. Having already exchanged on the properties, the client was extremely happy with how MFS handled the case to ensure they did not lose their deposit. An exit strategy was agreed upon through refinancing.