The vast majority of brokers have used bridging finance for purposes other than a ‘classic bridge’ over the past 12 months, according to new research.
A recent survey carried out by United Trust Bank (UTB) found that 80% had use a bridging loan for purposes other than simply to bridge the gap between a property purchase and sale.
UTB suggests that different uses to which bridging finance is employed is perhaps one factor driving the reported growth of the sector and explains why a majority of brokers are confident that they will continue to place increasing levels of bridging business in a relatively flat property market.
Meanwhile, 24% of brokers placed over £5 million of bridging business in 2011, while 9.4% placed £10 million or over.
39% of brokers placed between £1 million and £5 million of bridging business last year.
64% of brokers expect to place more bridging business in 2012 than they did in 2011 whilst 24% expect levels to remain steady.
“When you mention bridging loans the first thing that generally comes to mind is the ‘classic bridge’ used to bridge the gap between a purchase and a sale,” said Alan Margolis, head of Bridging at United Trust Bank.
“However, our survey shows an increasing number of brokers are realising that bridging loans can be used for many different purposes from capital raising to solving short term cash flow problems and that there are a myriad of scenarios for which bridging may be a suitable solution.
“In my view the varied use of bridging finance is an important driver behind the growth in the sector and supports the survey’s findings that many brokers’ will continue to place significant amounts of bridging business. As more brokers introduce their clients to bridging they will discover more varied uses for this flexible financing solution.”