More so than other years, I’m really looking forward to putting my feet up and watching Moonraker and all the other dog-eared repeats that will be gracing our TV screens over the festive period. It’s been an exceptionally busy year for the bridging sector and I could do with a break before it starts all over again in January.
The recent estimate by one short-term lender that the size of the market is now in the region of £3bn certainly drives home how much the bridging market sector has come on of late. I can remember the sound of jaws dropping when the market reached £1bn so it has clearly gone through the gears rapidly over the past year or two.
As brokers become more holistic in their advice, there’s no doubt that a lot more of them are using short-term loans, especially on the development side. During the summer, for example, we had an enquiry from a broker who had never used a bridge before. He has since used us to arrange four bridges in as many months — scout’s honour!
If there’s one reason why some brokers are still steering clear of the bridging sector, however, it’s because of the perceived complexity and risk. The irony is that, done right, nothing could be further from the truth. There are really only two key elements to a bridge that the broker needs to understand: the asset and the exit.
The asset, quite clearly, is what’s being used as the security for the loan while the exit – without doubt the most important part of the bridge – is how the loan is going to be paid back. And even though rates are more expensive than term loans, it’s important to remember that the rate can be academic, as the vast majority of bridges redeem in under a year.
Finally, as brokers kick back for a week or two this month and take a well deserved break, there’s something else they should know about bridging loans: you can have your cake and eat it. The reason for this is that, with some master brokers, you’ll do none of the work and get paid the exact same fee as if you did it all yourself.
Maybe make it one of your New Year’s Resolutions to give it a go in 2016!
Lorenzo Satchell is director of First 4 Bridging