Investors Turn to Unconventional Finance Options

With buy to let property financing becoming increasingly hard to acquire, investors are beginning to look into less conventional ways to support their purchase.

New interventions from the Prudential Regulation Authority mean that landlords and buy to let investors are now subject to stricter lending criteria, which can make mortgage products troublesome to acquire. This has fueled demand for bridging loans.

Previously considered a ‘last resort’ lending option, bridging loans are short term secured loans used to bridge a temporary shortfall in cash when purchasing a property. However, investors are becoming increasingly attractive to the flexibility offered from alternative finance provisions. For example, a bridging loan has no minimum term and also no exit fees, and the increasing levels of restrictions placed upon standard lending products means that these easier options are gaining appeal.

The loan type also offers much faster time for completion that high street products.

Commercial CEO at specialist lender Together, Marc Goldberg, commented: ‘We’ve seen strong demand from businesses and investors in this [bridging finance] area, and lent a total of £572.3 million of bridging finance in the 12 months to 30 September 2016. Meanwhile, across the group, annual lending topped £1 billion for the first time in our 42-year history.’

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