Downsizing – Bridging Top Tips for getting the right bridging deal

Often when we discuss helping clients find their dream home, the image that springs to mind is of growth and expansion, not downsizing, families needing more space for new arrivals, or buyers using their savings to gain access to greater amenities, larger gardens and luxury. This only became more pointed during the pandemic, which made many realise the importance of space, both indoor and outdoor.

This is all well and good, but to keep a housing market healthy, it is key to remember the importance of movement in the other direction. Without downsizing as part of the fabric of UK housing, those buyers trying to move up the ladder are going to face increased bottlenecks and supply issues.

Downsizing also has value in its own right, not just as a necessary mechanism to free up properties for the next wave of buyers. Typically, the word might conjure to mind the older generation, no longer in need of space for young children, potentially facing increased mobility issues, who want to find a more manageable property going into retirement.

There are also other benefits, however. For example, smaller properties bring with them the chance for lower utility bills, cleaning costs and maintenance demands, which in the face of the cost-of-living crisis could be a big draw. It also offers the chance to purchase in an area otherwise out of a buyer’s price range – closer to family, or with better access to lifestyle hubs such as city centres.

Relying on the chain

Downsizing is also, in theory, simpler than moving up the ladder, because ideally the cost of the new purchase will be more than covered by the revenue from the previous sale. Nevertheless, as with any property purchase, there can be complications.

Primarily, issues could arise around the property chain, with downsizers feeling the pressure to sell quickly, and facing a stalled market.

As house prices have skyrocketed, and the combination of this with hiked interest rates and increased bills and living costs mean that demand – particularly for larger, more expensive properties – is faltering. Fewer people can afford to make that first jump onto the property ladder, which has ramifications all the way up.

Comparison site Finder reports that the average UK first-time buyer is now 34 years old, six years older than in 2007. Meanwhile, 68% of those who had moved home said they expect to stay put for the foreseeable future.

With these social and economic forces looking set to stick around for a while, downsizers might find it takes longer to secure a buyer for their property. This either means potentially missing out on their ideal purchase in order to wait, or taking a lower offer for their larger home, in order to get things moving.

Bringing in a bridging deal for property downsizing

Bridging Top Tip 1

Downsizers do not have to be at the mercy of the vagaries of turbulent financial and property market, however. Instead, a well-deployed regulated bridging loan could lift them out of the chain and get them on the path to their new property.

Bridging Top Tip 2

A bridging loan takes into account the thing we know a downsizing client certainly has – assets – and allows them to take on the much stronger negotiating position of being a cash buyer, while freeing up time for their original property to sell for the right price.

Not only does this help with cashflow and getting a deal moving, it could also be key to reducing stress and worry, and helping a borrower find the right home for the long-term, and not just the best option right now.

Bridging Top Tip 3

Although it faces challenges at the moment, the UK property market is always going to see strong demand, propped up by perennial supply issues, so a bridging lender can often lend with confidence in these situations, knowing that sometimes, all it takes is a little time to secure the right deal.

Bridging Top Tip 4

To make sure that a regulated bridge is the right move, brokers and borrowers should work with a lender with extensive experience in this area – one which understands the ups and downs of the industry, and can look ahead to the future of this market with confidence.

Bridging Top Tip 5

At Alternative Bridging Corporation, we can offer regulated bridging loans for up to 12 months, backed up by decades of experience and a tailored, individual approach to each and every deal.

Read our latest report on property auctions for those who are downsizing and might be interested in buying a property at auction in October’s edition of ‘the property reporter’.