But please don’t worry – I’m not having a crisis. I’m just proposing that we think differently about the way we approach the short-term mortgage sector. Within our industry, we can often get too caught up with labels and pigeonholing certain offerings or providers, when actually we should be considering the value of the solutions they are able to deliver.
‘Nobody wants a mortgage…’
It has been said, ‘nobody wants a mortgage, what they want is a home’, and a similar principle is true for bridging finance. Nobody walks into a broker’s office demanding a bridging loan, but it’s highly likely that you will encounter clients who have long-term objectives for which transitional finance is required to help them overcome a short-term hurdle.
In an uncertain economic environment like we have today, those short-term hurdles are even more prevalent. And this is precisely the type of solution that bridging finance can provide.
So, for example, the client may be refurbishing or converting a property, or perhaps they are using the time and money to address the lease extension required on a flat where the remaining lease term might otherwise be considered unmortgageable.
For homemovers, it could simply be the case that they are in a position where they need to complete on the dream home they want to purchase before the funds are released from the sale of their existing property. This is a trend that we are seeing in some volume at the moment as the lack of supply of new property onto the market means that vendors continue to be in a very strong position despite reports of more subdued sales activity.
Another trend, growing in prominence, is buyers who are using bridging to put themselves in this stronger position, when choosing to downsize from their current property. The wave of multiple interest rate rises in recent months have made servicing a mortgage more expensive for everyone taking out a new deal.
For those homeowners who may not have considered downsizing previously, remortgaging onto a higher rate, and much higher monthly payments, than they are used to can provide the stimulus to make them think about a move to a smaller property.
All of these circumstances are situations where ‘transitional’ short-term finance can play a key role in helping your clients to achieve their objectives and ultimately result in good customer outcomes as a result.
Nobody wants a bridging loan. What they want is a solution to help them achieve their goals, and bridging can, and does, provide an excellent tool to enable them to do this. The market has grown beyond recognition in terms of volume, influence and reputation over the years.
It’s highly competitive, customer focused and those lenders that are members of the ASTL commit to our strict Code of Conduct, which puts emphasis on high standards of transparency delivering the best outcomes for customers.
In helping clients to finance a period of transition, brokers can create new opportunities to provide a valuable service and open new doors for customers. So, don’t be blinded by labels – think about the solutions that would best serve your clients