Bridging finance is a short-term loan that can help homebuyers when there’s a gap between the sale of their current property and the purchase of a new one. 

It’s a popular option for people facing delays in property chains and has grown to a £7 billion industry in the UK in the last 10 years. However, it comes with significant risks of high costs and repossession if not repaid and is often better suited for property developers and investors, rather than regular homebuyers.

We speak to some leading bridging lenders and brokers in the space to get their insights of whether bridging finance is worth using if you are a household and moving home.

A bridging loan helps to bridge the gap

“When moving home, one of the most common challenges is the property chain,” explains Dave Beard of price comparison site, Lending Expert. 

“This occurs when multiple transactions are linked together, and the sale of your home depends on someone else buying their property. Property chains can delay the process or even cause sales to fall through.”

“In such cases, bridging finance can be useful as it allows a buyer to proceed with the purchase of a new home without having to wait for the sale of their current one. The loan effectively “bridges” the gap, providing the funds needed to complete the purchase.”

Bridging finance helps you to move quickly by making you a cash buyer

“Bridging finance can be particularly helpful for those who need to move quickly,” explains Aiman Maklad of Blue Square Capital. 

“For example, if you find your dream home but are unable to sell your existing property in time, a bridging loan can give you the flexibility to secure the new property while waiting for your home to sell. In a fast-moving property market, this can be a huge advantage.”

A report by Savills shows that UK house prices rose by 10.4% in 2021, and the competitive nature of the market means that buyers often need to act fast to secure a property. Bridging finance can provide that speed, allowing buyers to move without being held back by delays in selling their existing home.

Bridging is not without its risks

While bridging finance can solve problems with property chains, it is not without its risks. Bridging loans are expensive, with interest rates much higher than traditional mortgages. 

MT Finance shows that the average bridging loan interest rate can range from 0.44% to 2% per month, which can quickly add up. For a typical homeowner, this can be a significant financial burden, particularly if the loan is not repaid within the expected timeframe. In addition to high interest rates, there are also set-up fees and exit fees to consider, which can increase the overall cost of the loan. If the sale of your existing property takes longer than anticipated, the costs of the loan can spiral, leading to financial strain.

The risk of not being able to sell your property in time

One of the biggest risks associated with bridging finance is the possibility that you may not be able to sell your existing property in time to repay the loan. If this happens, you could find yourself facing penalties or, in the worst-case scenario, being forced to sell your property at a lower price to repay the loan. This is why bridging loans are considered high risk, and they are not recommended for everyone.

Bridging finance is often better suited for property developers and investors, who are more accustomed to dealing with short-term loans and have the financial resources to manage the risks involved. 

These individuals typically use bridging finance to secure properties quickly, renovate them, and then sell them on for a profit. In such cases, the short-term nature of the loan aligns well with their investment strategy. Developers are often more comfortable with the higher interest rates, as they expect to recoup the costs when they sell the property at a higher value.

For regular homebuyers, bridging finance should be approached with caution. Unless you are confident that your property will sell quickly and for the price you expect, the risks may outweigh the benefits. 

According to research by UK Finance, the average property in a chain takes 16 weeks to sell, which can be longer than anticipated when taking out a bridging loan. This makes it critical to carefully assess your ability to repay the loan before committing to this type of finance.

In conclusion, bridging finance can be a useful tool when trying to move home, particularly in a competitive market where property chains can cause delays. However, the high costs and risks associated with these loans mean they are not suitable for everyone. Bridging finance is generally better suited for experienced property developers and investors who have a clear exit strategy and are comfortable with the financial risks involved. For most homeowners, it’s worth exploring other options before committing to a bridging loan.

In recent years, the topic of mis-sold car finance has gained considerable attention, especially in the UK, where personal contract purchase (PCP) finance is one of the most common methods of purchasing cars. 

Many consumers have raised concerns about being misled during the finance process, particularly around how interest rates and commissions were presented to them. 

However, a key question for many is whether it’s worth going through the lengthy process of claiming compensation for mis-sold car finance, especially when the amount they might recover could be as little as £300 or £500.

PCP finance is hugely popular in the UK, with around 80% of new car purchases being made using this type of finance deal. PCP agreements allow drivers to pay a lower monthly amount compared to traditional loans, with the option to buy the car at the end of the contract or hand it back. 

However, the transparency of these deals has been called into question. One of the main issues has been the lack of clarity regarding the commission paid to dealers by lenders. In some cases, car dealers were incentivised to secure higher interest rates, increasing the cost to the consumer without properly disclosing this information.

For consumers who believe they were mis-sold a PCP deal, reclaiming compensation is possible, but the process can be long and frustrating. In many cases, it involves gathering documentation, filing a complaint, and waiting months for an outcome. So, is it worth it? The answer depends on a few factors, such as the amount of money involved, the consumer’s personal financial situation, and their willingness to engage in a potentially drawn-out process.

If the amount of compensation being claimed is relatively small, say £300 or £500, some might question whether it’s worth the effort. 

Filing a claim can involve gathering all the necessary paperwork, including finance agreements, statements, and any correspondence with the dealer. This can be time-consuming and requires attention to detail. On top of that, once the claim is submitted, it may take months—sometimes even longer—before a resolution is reached. During this time, the consumer must remain patient, with no guarantee of a successful outcome.

While £300 or £500 might not seem like a large amount, it’s important to remember that this money was wrongfully taken in the first place, due to the mis-selling practices, explains Claim Smart. 

For some people, getting this amount back could make a real difference, especially if they are already dealing with tight budgets or financial stress. Moreover, if successful, reclaiming this money is not just about the amount; it’s also about holding the industry accountable for its actions and ensuring that these kinds of mis-sold finance deals don’t continue in the future.

On the other hand, for consumers who can afford to absorb the extra costs and who do not want to deal with the hassle of lengthy paperwork and months of waiting, the potential reward may not seem worth it. In some cases, consumers have reported that the compensation they received was less than expected, which can add to the frustration.

There are services available, including claims management companies, that can assist in filing a claim, though they often charge a fee or take a percentage of any compensation won. These services can help reduce the effort required by the consumer, but they also reduce the final amount of compensation. 

Consumer champion Claims Bible explains that you may have more success claiming with the financial provider, rather than the dealership or car maker such as VW. 

The success rate for car finance claims against providers such as MoneyBarn and MotoNovo are far higher than going through the car manufacturer directly. Whilst a claims management company might take a cut of 10% or 20%, they can certainly make your application far stronger and more likely to be approved and compensated, since their commission relies on it and they are more ‘in the know.’

Ultimately, whether it is worth trying to claim back on mis-sold car finance depends on individual circumstances. For some, it could be a chance to recoup costs and correct a wrong, while for others, the lengthy process and relatively small amounts involved might not justify the effort. However, for consumers who feel strongly about the principle of the issue, even a small amount of compensation may make the time and effort worthwhile, especially if it also leads to improved practices in the car finance industry going forward.

Many industries continue to embrace digital digitalisation heading into 2025, and the finance industry is no exception. As technology continues to advance, digital payments are becoming increasingly popular and are transforming the way individuals and businesses handle financial transactions.

This transformation is not just changing the way we conduct transactions; it’s fundamentally altering the relationship between consumers, financial institutions, and technology. As we delve into this digital revolution, we’ll explore how it’s impacting various aspects of our financial lives and what we can expect in future years.

The Evolution of Digital Banking

The journey of banking from physical branches to the palm of our hands has been nothing short of extraordinary. Traditional banking services, once confined to specific locations and business hours, are now available 24/7 through mobile banking apps. This shift has empowered consumers with unprecedented control over their finances, allowing them to check balances, transfer funds, and pay bills with just a few taps on their mobile devices.

The convenience offered by mobile banking has led to a significant reduction in foot traffic at physical bank branches. Many banks are now reimagining the role of their brick-and-mortar locations, transforming them into advisory centres for more complex financial services rather than places for routine transactions.

As digital banking matures, we’re seeing an increase in comprehensive online financial management tools. These platforms go beyond basic banking functions, offering budgeting features, investment tracking, and even personalized financial advice. They aggregate data from various accounts and analyse spending patterns, providing users with a holistic view of their financial health.

The digital financial platforms are becoming increasingly sophisticated, leveraging machine learning algorithms to offer predictive insights. For instance, they can forecast future expenses based on historical data, alert users to potential overspending, and suggest ways to optimise savings.

Some advanced tools even factor in external data, such as local economic indicators or industry trends, to provide more accurate financial projections.

Technological Advancements Driving Change

Artificial Intelligence (AI) is playing an increasingly significant role in shaping the future of digital payments. AI algorithms can detect fraudulent activities in real-time, provide personalised financial recommendations, automate customer service through chatbots, and predict future spending patterns to help with budgeting.

In fraud detection, AI systems can analyse vast amounts of transaction data in milliseconds, identifying patterns that might indicate fraudulent activity. This not only protects consumers but also reduces losses for financial institutions. The speed and accuracy of AI in this domain far surpass traditional rule-based systems, adapting in real-time to new fraud tactics.

Personalised financial recommendations powered by AI are becoming more context-aware. These systems can now consider various factors, including an individual’s income, spending habits, life stage, and even macroeconomic trends, to offer tailored advice. For instance, an AI system might suggest increasing retirement contributions when it detects a salary increase, or it might recommend ways to build an emergency fund if it notices irregular income patterns.

Moreover, PayPal stands out as a prime example of how digital payment innovations are transforming the financial sector. Since its inception, PayPal has consistently pushed the boundaries of what’s possible in online transactions, evolving from a simple online payment system to a comprehensive digital financial platform. Its user-friendly interface and widespread acceptance have made it a go-to option for online shoppers. Its success in e-commerce has paved the way for its adoption in various other sectors, including the online casino industry.

One of PayPal’s key innovations has been its One Touch feature, which allows users to stay logged in across different merchants, dramatically reducing friction in the checkout process. This has been a game-changer for mobile commerce, where entering payment details can be particularly cumbersome.

PayPal has also been at the forefront of peer-to-peer payments with its Venmo service. This has transformed how individuals split bills, pay rent, or share costs for group activities. The social aspect of Venmo, where users can add notes and emojis to their transactions, has made it particularly popular among younger users.

PayPal has emerged as a game-changer in many industries, including the iGaming industry. Its integration into this industry showcases how digital payment solutions can adapt to specific sector needs while maintaining high standards of security and user experience. Thanks to PayPal’s robust security measures that ensure safe and secure transactions, there are now hundreds of PayPal casino sites available to players looking for trustworthy online gaming options.

While still in its early stages, blockchain technology and cryptocurrencies are also poised to disrupt traditional banking systems. They offer the potential for faster cross-border transactions, reduced transaction fees, enhanced security and transparency, and financial inclusion for the unbanked population.

Blockchain’s decentralised nature could revolutionise how financial transactions are verified and recorded. By eliminating the need for intermediaries in many types of transactions, blockchain could significantly reduce processing times and costs. This is particularly promising for international remittances, where traditional methods often involve high fees and long processing times.

Cryptocurrencies, while volatile, are gaining traction as an alternative asset class. Some forward-thinking financial institutions are beginning to offer cryptocurrency trading and custody services to their clients. Central banks worldwide are also exploring the concept of Central Bank Digital Currencies (CBDCs), which could benefit cryptocurrencies while maintaining the stability and regulatory oversight of traditional fiat currencies.

Summary

The future of digital payments is bright, promising, and full of potential. As technology evolves, we can expect even more seamless, secure, and intelligent payment solutions. From AI-driven personal finance management to blockchain-based transactions, the innovations on the horizon will continue to reshape our relationship with money.

For consumers, this means more convenience, control, and choices in managing their finances. The ability to access a full suite of financial services from a smartphone, coupled with personalised insights and advice, will empower individuals to make better financial decisions.

For financial institutions, the digital payment revolution presents both challenges and opportunities. Those who can successfully navigate this changing landscape will emerge stronger, with more efficient operations and deeper customer relationships. However, this will require a willingness to embrace change, invest in new technologies, and potentially rethink traditional business models.