Wednesday, May 29, 2024

Bridging Loans for Home Improvements a Popular Post-Pandemic Option

One of the main points of appeal with bridging finance has always been the speed of the facility. But as households across the country re-examine their priorities, bridging loans are being used for a more diverse range of applications than ever before.

Bridging finance for property refurbishments and renovations, for example, has grown in popularity throughout the pandemic. Far from a temporary trend, most experts see this segment of the bridging sector gaining further traction over the coming years.

Much of which has been attributed to the new hybrid working model that has become the new norm for millions; if not working exclusively from home, most have become accustomed to spending less time in the office.

Coupled with lingering memories of lockdown, it is hardly surprising more people are spending more money on home improvements than ever before.

Shifting Priorities

The pandemic forced households up and down the country to both reconsider their priorities and the way they utilise the space they have available. Spending more time at home than was previously the case meant finding innovative ways to make our homes more comfortable, practical and pleasant places to exist.

Improvements to cooking and dining areas were top priorities for some, whereas others set about creating productivity spaces. 

Many set their sights on relocating to quieter and more remote parts of the country, away from busy urban centres; some making the conscious decision to purchase homes in need of major repairs and renovations, in order to acquire them at affordable prices.

More households than ever before are looking to fund minor and major renovations alike with affordable financial products. Many of which are finding bridging loans a more convenient and cost-effective option than a traditional High Street loan.

This is something that counts double for applicants with imperfect credit, for whom conventional loans may be out of the question.

Light and Heavy Bridging Loans for Refurbishments

Government data shows there was a 45% year-on-year increase in the number of planning applications received during Q2 2021. The momentum from this huge spike is likely to be maintained for some time, as homeowners continue to make efforts to make the most of what they already have.

Bridging finance is ideal for covering the costs of minor and major home improvements alike, where the full loan balance can be repaid within a comparatively short space of time. Most bridging lenders divided their renovation products between two categories – light and heavy.

The light renovations category typically refers to non-structural property improvements, which are primarily cosmetic in nature. Anything more extensive such as a loft conversion or extension would be bracketed within the heavy refurbishments category.

In both instances, qualifying for a bridging loan can be much simpler than accessing funding on the High Street. Eligibility is determined primarily on the basis of security to cover the costs of the loan and a workable exit strategy – i.e. how the borrower intends to repay the capital.

Criteria like income level, employment status and even credit history are of less significance. All boosting the appeal of bridging finance further, at a time when more households than ever before have faced two consecutive years of economic turbulence.

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