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Bridging Finance: Myths and Misconceptions Addressed

Contributed by Craig Upton
August 26, 2021

The UK's bridging sector is well on its way back to pre-pandemic norms.

According to the latest figures published by the Association of Short Term lenders (ASTL), total bridging loan completions fell from GBP 3.99 billion in 2019 to GBP 2.88 billion in 2020. None of which was particularly surprising, given the effects of the COVID-19 crisis.

But what was interesting is how the data indicated an 11% increase in the overall number of bridging loan applications last year. The uptick began in the third quarter (a full 25.7% increase on the previous year) and continued accelerating well into Q4 - almost 40% higher than the year before.

Analysts have credited this extraordinary performance to the UK's wider economic recovery and growing confidence among investors, who have shown a positive response to the easing of restrictions and the vaccine rollout.

Consequently, some have suggested that the total value of the market could now climb as high as GBP 15 billion within the next five years.

A Misunderstood Market for Many

The bridging sector has really come into its own over recent years, though continues to exist as a misunderstood market for many. Myths and misconceptions regarding the purpose and value of bridging finance remain rife.

Specifically, there are four troubling untruths about bridging loans that continue to perpetuate even today.

1. Bridging finance is excessively expensive

Bridging loans are issued at a monthly rate of interest, which can result in what appears to be an elevated APR. But as bridging loans are designed to be repaid within a matter of months, the Annual Percentage rate is inconsequential. Repaid promptly, a bridging loan can be one of the most cost-effective forms of short-term funding available.

2. Bridging loans are a last resort emergency option

Quite the contrary - bridging finance is often the first option for investors looking to cover short-term costs, without the excessive fees and complications associated with traditional business loans and mortgages. Bridging loans can be used for any case and provide a smart option for preventing last resort emergency situations from occurring in the first place.

3. Bridging loans are difficult to qualify for

Most bridging finance is issued exclusively on the basis of two things - security to cover the costs of the loan and a provable exit strategy. Consequently, it is perfectly possible to qualify for bridging finance with a poor credit score or even a history of bankruptcy/insolvency.

4. Bridging loans are complicated and difficult to understand

By its nature, bridging finance is designed to be as simple and straightforward as possible. Bridging loans can be accessed within a matter of days, repaid within a matter of weeks and issued with fewer additional costs and commissions than many comparable loans.

If you are looking to get the best possible deal on a bridging loan for any purpose, independent broker support is essential. Whether you are ready to apply or simply looking to learn more about the potential benefits of bridging finance, we would be delighted to provide you with an obligation-free consultation. Call or e-mail the team at today for more information

Craig Upton supports UK businesses by increasing sales growth using various revenue streams online. Creating strategic partnerships and keen focus to detail, Craig equips websites with the right tools to increase traffic. Craig is also the CEO of iCONQUER, a UK based SEO firm and has been working in the digital marketing arena for over a decade. A trusted SEO consultant and trainer, Craig has worked with British brands such as, DJKit, UK Property Finance, Serimax and also supported UK doctors, solicitors, builders, jewellers, to mention a few, gain more exposure online. Craig has gained a wealth of knowledge within the digital marketing space and is committed to creating new opportunities working with UK companies.


Tags: United Kingdom (UK) | Banking | Banks/Financial | United Kingdom | Banks



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