Re-Branding Bridging is now Necessary

The term “bridging” has long had negative connotations when applied to finance – and this must now evolve, writes Jason Berry, Group Sales Director at Crystal Specialist Finance…

Bridging loans are often perceived as complicated, expensive and associated with high fees offered by opportunistic high-net-worth individuals or wealthy private family offices.

This perception is outdated and hinders the growth and acceptance of what is actually a viable, professional and ethical funding solution.

It is therefore time for the market to come together and replace the term "bridging" with the phrase "short term lending" to accurately reflect the current landscape and help this funding solution gain mainstream acceptance.

Myths vs. Reality

The misconceptions surrounding bridging stem from a time when these loans were indeed extremely complex to source and costly to service.

However, the market has evolved significantly. Today, bridging loans are often no more difficult to place, administer and fund than a standard mainstream mortgage.

Indeed, funding is now widely available through reputable banks, specialist lenders and distributors like Crystal Specialist Finance.

According to trade association UK Finance, the UK bridging market has grown substantially, reflecting increased competition and a broader range of available products.

Market commentators vary in agreeing the size of the UK market - but the most reliable source ASTL quotes ￡4bn from its members.

The market growth has led to more consumer-friendly options and a decrease in the overall cost of bridging loans.

The Bank of England's current base rate of 5.25% is only marginally higher than the starting rates for bridging loans, which are around 0.68% per month.

This is a stark contrast to previous years when the Bank of England base rate was as low as 0.25%, and the annualised difference between standard and bridging rates was much more significant.

The Benefits of Short Term Lending

By re-branding “bridging loans” as “short term lending”, we can help change the perception of this funding solution.

Short term lending more accurately describes the nature of these loans and aligns them with other mainstream financial products.

Here are some key benefits of this re-branding:

1. Ethical and Professional Image: The phrase "short term lending" conveys a sense of professionalism and ethics, distancing itself from the negative image of high fees and opportunistic lending practices.
2. Accessibility and Simplicity: Short term lending is perceived as more straightforward and accessible, encouraging more potential borrowers to consider it as a viable option.
3. Consumer-Friendly Market: Increased competition in the market has made short term lending more consumer-friendly than ever before. Borrowers now have access to better rates, more transparent terms and a wider range of lenders.
4. Mainstream Acceptance: Re-branding as short term lending can help this solution become more mainstream, normalising it as a common financial tool rather than a niche or last-resort option.

Conclusion

The term "bridging" no longer reflects the reality of the modern, competitive and consumer-friendly short term lending market.

By adopting the phrase "short term lending," we can help change outdated perceptions and encourage more borrowers to consider this flexible funding solution.

The shift towards using "short term lending" will help the market evolve, making these loans a normal, mainstream option for borrowers in need of temporary financial solutions.

It's time to leave behind the legacy of high fees and complexity and embrace the future of ethical, professional, and accessible short-term lending.