Some mortgage brokers could be missing out on potential buy to let clients as the property they want to borrow against is unmortgageable, according to bridging lender Fincorp.
The firm reports an increase in the number of people using bridging loans to fund refurbishment projects ahead of remortgaging to a buy to let product in order to let the property.
It marks a change, according to Fincorp, from when borrowers would use finance as an option prior to property sale.
The Council of Mortgage Lenders’ (CML) most recent figures highlight a surge in growth for buy to let re-mortgage loans.
Overall, 2013 figures show gross lending to be at 160,900 loans – a 23 per cent increase on 2012. The total value of these loans was £20.7 billion, up 32 per cent when compared with the previous year.
The same set of figures shows the number of buy to let loans taken out last year for house purchases to be at 82,930, a 19 per cent increase on 2012. With a total value of £9.3 billion, this represents a 26 per cent increase on the previous year.
Buy to let remortgage lending showed the highest proportion of buy to let growth, up 29 per cent on 2012 figures at a total of 76,260 loans.
Valuing these loans at £10.6 billion represents a 39 per cent increase in loan value compared to 2012.
It is clear that buy to let has become a popular way to move on from short term loans.
Matthew Anderson, director of Fincorp said: “The bridging market has changed a lot in the past five years and we’re seeing more and more of our clients use buy to let as their exit from a short term loan.
“The CML’s buy to let figures show a strong recovery in that market and we’re convinced that bridging is partly responsible.”
As the UK economy continues to grow and financial markets begin to move more freely, the funding available to buy to let lenders becomes increasingly accessible.