It’s no surprise that many people choose to take out a bridging loan to help with their finances when it comes to property acquisition. However, according to recently published data by Bridging Trends, the rate of which individuals are applying for loans for refurbishment purposes has increased dramatically. This has seen popularity soar from 18% in the first quarter of 2018, to 34% in the second quarter.
Why Has This Happened?
There are a number of reasons this unpredicted rise in renovation loans may have occurred. Firstly, it’s fair to make the assumption that moving up on the property ladder is more difficult now than it may have been previously. Therefore, instead of purchasing a new home, many homeowners are inclined to renovate. It may be difficult to come up with the funds for a renovation project straight away, so that’s why many people turn to lenders. Though the loan may only be needed for less than 12 months, for some people it can make all the difference to their future.
Lenders can provide you with the renovation loan needed to get refurbishment underway. It may be used to upscale because of a new addition to the family, or perhaps an injection of funds is needed so a house can be remodeled and sold on. Either way, the increase in the second quarter of this year has left many baffled.
How It’s Used For Refurbishment
Refurbishing your home is a huge task to undertake. Whether this means adding an extra room, building a conservatory or converting an attic – the process is cheaper (and in many cases easier) than buying a new property.
Many property investors look for ways to add value to a home or commercial property, to help improve yield and capital value. There’s no real explanation for this sharp increase in bridging loan applications for refurbishment in Q2. However, it’s clear to see investors are opting for fast and flexible bridging loans to tackle the legislation that has made it tougher to buy new properties.
The trend in renovation loans is likely to be an anomaly, the last time there was such an increase was in 2015. On the other hand, this data does highlight the need for bridging loans being ever prevalent. Given the current difficulties many face in acquiring new property, there is evidently a need for a helping hand in the right direction.
If you’re considering a bridging loan for your refurbishment plans, please don’t hesitate to contact us for a free quote.