Written by Jo Logan, Bridging & Development Finance Specialist
It’s not yet clear what impact the cost-of-living crisis and economic uncertainty will have on property prices. However, many experts predict that transaction activity is likely to fall before prices do, as potential vendors hold off from putting their property on the market, further restricting supply. In this situation it could still be the case that sellers have the upper hand, maintaining the ability to choose exactly whom it is they sell to.
With this in mind, selling to a cash buyer who is able to move with immediate effect is far preferable to selling to someone who first has to sell their current property and must rely on every transaction in the chain going through successfully in order to have the required funds.
Cash buyers don’t hold much interest for mortgage brokers, but you could put your clients in the advantaged position of a cash buyer, even if they have a property to sell.
At Brightstar Financial, we have definitely seen a rise in demand for regulated bridging finance from brokers working with clients who are regular home movers that want to give themselves the best possible chance of securing the next home of their dreams by having the funds immediately available to secure a transaction, even before they have sold their current property.
By taking a bridging loan on either the property being sold or purchased or both (depending on the transaction), home movers can release the capital they need to purchase their next home, which means they are in a better position to gain an advantage against other buyers and potentially even negotiate a purchase price. This approach may even give movers the time they need to maximise the price of the property they are selling, which could in some circumstances potentially offset the cost of the short-term borrowing.
The exit route in such a transaction would be the eventual sale of the property and, with regulated bridging loans available for up to 12 months, this should provide plenty of time to tidy up the loose ends.
If you have clients who are looking to move home and want to give themselves the best chance of securing the best property, a bridging loan might be the right solution. However, for those who are inexperienced in this sector, the bridging market can be complex, with dozens of small lenders, all of which offer different rates and fee structures. If in doubt, the best way of ensuring you are able to deliver the best outcomes for your clients is by partnering with an expert, like Brightstar Financial. That way you can be confident that you are helping to put your client in the strongest position to buy a home, with the most appropriate solution for their circumstances.