“It is great to see lenders evolving their products to suit market conditions,” says Chris Lloyd, associate director at Enness. “This product has been very popular with our older clients highlighting its importance in the downsizing market.”
Harpenden is another lender that is arranging rapid loans for Generation Stuck: an Enness client needed to find £687,500 after the sale of their £1.2 million home fell through and they wanted to complete on a new-build within a tight deadline. The building society agreed a rate of 6.19 per cent and an arrangement fee of 2 per cent.
The rates for bridging loans typically start at 0.75 per cent a month, which works out as 9 per cent a year, according to Stephen Wasserman, the managing director of West One Loans, a specialist bridging finance lender. Typical arrangement fees are 1 per cent.
He says this type of finance is sought by people who are “stuck in a chain and it’s taking longer than they would like to sell their existing homes,” or small business owners who need to release money for their business quickly. The majority of his clients are property investors.
The other option for short-term finance, suitable for people who don’t need to borrow so much, is a personal loan. These are becoming increasingly generous and rates have gone down. First Direct launched loans of up to £50,000 at 6.7 per cent last year (most personal loans are capped at £30,000). This is almost double the 3.4 per cent it charges for loans below £30,000. Someone borrowing £50,000 over the maximum seven-year term would repay £743.45 a month — a total of £62,449.