Ever Walked Past A Scaffolded Building? It Could Be Bridging-Loan Backed. Greenfield Bridging & Clifton Private Finance Talk Bridging Myths

If you’ve ever walked past a scaffolded building, there’s a chance it’s held up by more than steel – it could be bridging-loan backed. Bridging loans are becoming the norm for property investors boxing clever with their financial strategy, including cash-buyer negotiation power. They’re also underpinned by the fact that the difference between a standard mortgage rate and a competitive bridging loan rate isn’t the leap it used to be. So why, despite this and regulation, are some brokers still reluctant to bridge the financial gap with clients?

In Greenfield’s latest interview with Sam O’Neill from Clifton Private Finance, myths are not only dispelled – they openly invite brokers and clients to discuss bridging as a financial option like any other. But with one word of caution: bridging funders’ customer acquisition strategies vary, so understanding the perceived speed of funding, front-end rate, and back-end service and flexibility is key to transparency and excellent service for a client. 

Myth: Is bridging to protect residential sales that are about to fall through?

Although bridging loans are regularly provided as a financial strategy for property investors, some still perceive them as an emergency fund for when residential house sales go south. Greenfield asked Sam what the reality is regarding clients requiring bridging loans.

“It’s a bit of everything: we can categorise it as regulated and non-regulated bridging lending. So, family moves versus your investments. For family purposes, this is trying to solve a chain break (regulated). At the other end of the scale is a property developer who's going out there identifying places where new housing stock is required and maybe buying something that needs a bit of love and selling it on or letting it out (unregulated if not secured against a home).” Sam O’Neill. Head of Bridging, Clifton Private Finance Ltd

What are a client's potential gains and losses when it comes to bridging? 

As with any financial decision, bridging may or may not be suitable based on a client's circumstances. However, when presented with a potential loss of opportunity, deposit, or potential gains in profit – working with the right bridging funder might be the right choice.

Greenfield Birdging recently worked with Sam to secure a property in Spain for his client. The client encountered different rules and regulations and needed to proceed quickly.

Sam added, "The client had already paid a deposit, and we'd raised finance previously with his property SSTC. Unfortunately, there was a bit of an issue with the chain, and the client then needed a quick cash injection to bridge the finance timewise. We came to Greenfield because they were the cheapest and on the flexible side. Our job is to use our experience as brokers who have worked with lenders like Greenfield Bridging to present the client with facts and full transparency, which is often a cost, flexibility and speed comparison exercise. There are cheap lenders, like Greenfield, who are also very fast. If we hadn’t helped the client, the client’s deposit (£250k) would have gone to the wind. They made it fairly clear abroad that there was no flexibility and a tough deadline.”

What misconceptions exist in the bridging market?

Despite the increase in bridging loans provided in the UK, some common myths and misconceptions remain.

Sam agrees, saying, “As I mentioned previously, there’s perhaps a misconception about the speed with which a lender can provide a bridging loan, so it’s important to look at wider funder options for the client and the flexibility regarding back-end service. If a client gets into hot water, will the funder say, ‘Times up, we want our money back’, which is their contractual right? Some funders are better on the back end and offer more flexibility as they value the relationship with you and the client, who is potentially an investor who may use them again.” 

“Let’s face it, no one wakes up in the morning and wants a bridging loan; it always starts with a problem to solve, and that’s where we, as brokers, can help. Cost is also a big misconception with bridging, as, in fact, it’s not a million miles away from the cost of a mortgage rate and is relative to the needs or wants of the client. Again, it’s about presenting bridging as a choice.”

What barriers exist for brokers and bridging?

It’s true that bridging has been turned on its head in the last ten years with regulation, more funders, better service levels, and competitive rates. Sam tells Greenfield why the exams are worth it, and it starts with clients.

Sam added, "Brokers may be hesitant to do extra exams and go through company regulations and red tape due to the admin. But it's good for the client when it all boils down.”

Richard Keen, National Sales Manager at Greenfield Bridging, agrees that “without bridging, investors would struggle to solve many of the challenges they face. Our job as funders and brokers is to present possible solutions and, at Greenfield, competitive rates and flexibility. At the end of the day, the client is presented with options, and it’s a financial choice like any other. We’d like more brokers to see bridging as that ‘option’ and to call us if they have a client in mind.” 

If you’re unsure, call – Greenfield Bridging only lends if it suits everyone. Call 0800 779 7097 or email info@greenfieldbridging.com to get a decision in one hour.