The speed and flexibility offered by bridging finance has made it a popular source of capital for those seeking to invest in a residential or commercial property. Featured in FTAdviser, MFS’ latest research report revealed that a fifth of UK homeowners in the UK had used a form of alternative finance in the last decade.
While the growth of the alternative finance market has been impressive, the same body of research by MFS revealed that there remains a lack of awareness in some quarters when it comes to sources of credit outside of mainstream lenders.
The advantage of bridging loans over traditional loans lies in the fact that they are more flexible and therefore can be better tailored to the needs of the individual borrower, regardless of how complex a case may be. This is particularly true when it comes to businesses in need of a short-term loan, be it to take advantage of a lucrative expansion opportunity or pay off existing debts ahead of an impending deadline. The same can also be said for offshore residents who can struggle acquiring a loan from a traditional lender.
The time-consuming and burdensome application process used by banks can make it extremely difficult for businesses to receive the funds they need in time from traditional lenders. Thankfully, bridging loans offer the capital needed for companies to act confidently and quickly. Here’s an example from September 2018 of MFS in Action, supporting a business in need of fast access to finance.
MFS in Action
A client who resided offshore was in urgent need of funds for business purposes. Being based outside of the UK was making it extremely difficult for them to secure funds from a traditional lender.
However, with the client offering a UK investment property as security, MFS acted quickly.
A valuer was then sent from our panel of surveyors to value the property the next day, with a report following 48 hours later. Our solicitors were also informed of the case, and through MFS’ leadership and guidance working with both UK and international lawyers simultaneously, we were able to issue a loan.
The market value of the asset used as a security was £500,000, and Market Financial Solutions could issue a loan valued at £250,000 without delay. The exit strategy was agreed through the sale of another investment property within the client’s portfolio.