GB Finance, a bridging loan lender, has announced that they have recorded ‘unprecedented’ growth during 2008 (+46%), both in the number of loans on its books (+37%) and also in the size of the average loan (+6%).

The lender believes some of their success is due to the credit crunch, with the market becoming harder for traditional lenders and brokers, which has led to an increase in the levels of bridging loan business. They also feel that some of their recent growth can be attributed to work that they have carried out educating brokers in the variety of ways that bridging finance can be used.

They point to four key areas in which bridging loans can be used. It can allow for a borrower to have a ‘cash-buyer’ status, as a loan can be formalized in 24 hours and therefore allow for a quick completion of the purchase. It can fund undervalue purchases, allowing a borrower to borrow on the actual value rather than the cost of the property and then refinance through a traditional lender. It can be used as a refurbishment facility, to allow for quick refurbishment before the property is presented to a traditional lender for long term finance and more favorable terms. Finally, it can be used for an auction purchase, with funding arranged within the 28 day auction timescale, while at the same time the borrower can seek out more long term finance.

Gary Gardner, director at GB Finance, told PIN: “The buy-to-let sector is likely to grow as more and more first time buyers cannot get on the property ladder. Requirements in the rental sector are estimated to increase by between 1 million and 1.5 million over the next year. Low acquisition prices and increasing rental sector demand are fuelling a resurgence of this market. The only restriction being raising the finance and this is where we come in as a bridge lender, whereby we are able to work with the investor to assist them in becoming a virtual cash-buyer to enable them to secure the assets within days. As we look at the bigger picture, we will also work with the investor to maximise gearing by arranging the longer term funding”.