Bridging loans are risky

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Private financial services provider Savills has warned of the increased risk posed by 100 per cent bridging loans.

Bridging loans help to fill the gap between buying one property and selling the other, effectively providing a short-term means of owning both.

However, taking such a loan for the full value of a property may be unadvisable, according to Savills.

This is particularly the case where a bridging loan is being obtained due to the property in question having been undervalued.

Melanie Bien, one of the firms directors, says: "We would say its too risky because of where valuations are at the moment.

"Lenders are going to be more cautious than ever and borrowers should be as well."

She adds that, due to the short-term nature of a bridging loan, such products should be avoided in a market where there is no guarantee of being able to secure a mortgage quickly.

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