Belgium Bridge Loans

Bridging loans are very common in the UK and are usually used to buy property before your old home has sold, purchase property without a mortgage, or raise liquidity that will allow you to achieve a specific goal. The specifics of a Belgian bridging loan are very similar to those in the UK. Essentially, a lender will offer you a short-term loan secured against property in Belgium. 

Although on the surface using bridging loans is fairly simple, it is important to remember that local laws and regulations will still be applicable, which may affect how bridging finance works or how you can use it. It is imperative to understand how Belgian laws may differ from those in your home country or country of residence and realise what, if any, material effect there may be on the deal. Your broker will be able to talk you through what you need to know based on your specific situation, but things to consider include how real estate is bought and sold in Belgium, your fiscal position, any potential liabilities and responsibilities, as well as the local legal system. If you do not already have a team to hand, Enness can connect you with the right local advisors you’ll need to work with – this might include legal teams or tax experts, for example. 

Enness offers 24/7 support for bridging loans – particularly in cases where you need to complete the transaction by a certain deadline. Your broker will ensure all parties involved in the deal work to schedule and make certain that everyone delivers the plan on time and as expected.

Regardless of your motivation for pursuing bridging finance or what you want to achieve, the most essential element of this type of loan is your exit strategy - in other words, how you will repay the loan. A clear strategy of how you plan to manage the funds is also vital. 

Although these types of loans can be more expensive than conventional property finance products like a mortgage, bridging loans are always competitively priced considering your intended use for the loan, the amount you wish to borrow, and the speed at which you can draw down funds. Often, despite bridging loans being slightly more expensive, the extra cost is often offset by the opportunities it allows.  

You can use Belgian bridging finance to:

• Complete Belgian property transactions quickly
• As an alternative financing method to a mortgage or other types of property finance
• To finance a property purchase in Belgium quickly if you stand to lose a deposit
• To create liquidity to allow you to purchase a home in Belgium before another property has sold
• Release equity (including significant loans) from a residence you own in Belgium

Although bridging loans are common practice in the UK, they are a specialist lending product and won't always be the most beneficial option for your situation. Bridging finance is not a financing product to use simply because it is available, not least because lenders will want to understand precisely why you want this type of loan and see a solid rationale for its use. Enness will always walk you through all your options and any alternative financing methods you could use before settling on a Belgian bridging loan, so you can decide if it is the right option for you.

If you want to buy Belgian real estate quickly or want to finish a property transaction faster than you can secure a domestic or international mortgage, bridging finance can be a fantastic option. You can draw down bridging loans exceptionally quickly, meaning this type of finance can be used to buy a property before another property in your portfolio has sold. When your loan term comes to a close, you can either refinance or use the capital generated from another property sale or a liquidity event to repay the loan.  

You can also use Belgian bridging loans to release equity (including high-value loans) against a property you own in Belgium. In this scenario, lenders will be flexible concerning your plans and can consider releasing equity that will allow you to pursue projects and opportunities with cash flow challenges that require capital to overcome. In the latter case, you will need to show your overall net worth, assets, and income support equity release or a loan, rather than choosing this type of finance as a last-ditch attempt to get out of financial trouble.

Lenders will want to understand the value of your Belgian property, how much you want to borrow, LTV and how you will use the loan. Your exit plan and how you manage the funds will also play a part, as well as your financial background, net worth and income. Some lenders offer around 60 or 65% LTV for a bridging loan secured against Belgian property, but the LTV may be lower in some instances such as if you want to borrow a significant amount or have very ambitious plans.

The lenders that offer bridging loans in Belgium are usually sophisticated players with niche expertise in international lending. As such, they can generally structure finance via corporate entities and various ownership structures if you or your adviser wish to do so for any reason.

You do not to be a full-time resident of Belgium to access bridging finance. Lenders offering Belgian bridging loans are used to working with non-resident property owners, and this will not prevent you from borrowing as long as you have viable plans and a solid exit strategy. Regardless of your nationality, country of residence or plans, Enness will negotiate the highest possible LTV and most competitive loan for you. 

In Belgium, bridging finance is a relatively niche area of expertise. The lenders that offer high-value bridging finance have a great deal of expertise working with sophisticated borrowers, high-net-worth individuals, non-resident property owners and various nationalities. Most of these lenders can offer bridging loans in deals that include international structures.

When it comes to a Belgian bridging loan, you will almost always need a tailored loan that Enness will negotiate based on your specific circumstances, such as your net worth, property value, plans and how much you want to borrow. Enness will approach the lenders that will offer you the most competitive loan and who will be able to deliver your requirements regarding structuring, terms, loan size and LTV. Your broker will always work to maximise what you can borrow and negotiate the most affordable rates. Enness will also ensure all the parties involved in the loan are working towards the same goals and that the transaction as quickly and effectively as possible.  

You can use a Belgian bridging loan in different ways. For example, you may want to buy Belgian property quickly or without a mortgage. You may stand to lose a deposit if you need to complete a transaction before you can secure a mortgage. Alternatively, you may wish to release equity from your property in Belgium.

You can use Belgian bridging finance to achieve all these outcomes. Other advantages of bridging finance include:

Speed

The most common reason borrowers turn to bridging loans is that loans can be drawn down extremely quickly, often in as little as two weeks. Because of the speed with which lenders can deliver these loans, you may find using bridging finance is a much faster and more efficient way of arranging property finance than via an international mortgage, which will typically take much longer to arrange. Using Belgian bridging loans to complete a transaction quickly if you face losing a deposit on a property in the country is also a popular way of using this type of finance.

Flexibility

Bridging finance is a diverse financial solution; you can use a bridging loan to bring your plans to fruition or solve a problem, and they are often considered far more flexible than mortgages.

No matter your reason for wanting to use bridging finance, and whatever you want to achieve, Enness will need to present lenders with your plan of action. In particular, you will need to demonstrate what you will do with the funds and how you will manage them. If you wish to release equity from a property or use the loan to finance cross-border projects (i.e., you will use loan capital outside Belgium), you will find that these details are vital to lenders. Lenders are generally open to both straightforward and ambitious plans, but you will need to have a defined and feasible plan of action that lenders can get behind.

Large Belgian Bridging Loans

Substantial bridging loans are available given the right circumstances, and Enness has a track record of brokering these. Loans of €1-€5 million (or more) are possible if your property's value and your financial background supports lending these amounts. Loans of €10 million or more can also be offered by niche lenders, in which case Enness can once again broker this on your behalf. ​​

Price

Bridging loans are almost always more expensive than longer-term finance products such as conventional mortgages. It can be easy to think that bridging finance is expensive, however bridging loans are only ever used when you want to achieve a specific outcome or make something happen. For example, you may need to access liquidity quickly (for various reasons), or you may be faced with a scenario where you cannot – or do not want – a more conventional finance product like a mortgage – at least in the short term. The benefits of achieving these goals often outweigh the more expensive nature of the loan.  

It can often be helpful to view the extra cost of a bridging loan by assessing what it will help you achieve and the doors it will open for you. Bridging finance can solve problems and allow you to pursue opportunities that conventional finance options cannot. Sometimes, it is the only way of achieving your desired outcome or making something happen quickly. Understanding all of your options and the cost of bridging finance is imperative. However, in many cases, the slightly higher expense is well worth it when you consider the price of losing out on an opportunity or being unable to complete a property purchase quickly.

Fees

As well as the cost of the loan itself, there are other costs involved with bridging finance, including legal costs, lender fees, valuations and arrangement fees. In some cases, you may also need to consult tax advisers and other experts, depending on your financial background and the complexity of the deal. At the beginning of the process, Enness will thoroughly explain all the fees you will incur if you take out a Belgian bridging loan, so you understand precisely what you will need to pay and what the whole finance package will cost to deliver.

Risk

Bridging finance is a type of secured loan. This means that if you cannot keep up with repayments or you cannot repay the loan at term, you may stand to lose your property. Having detailed plans for both how you will manage the loan and your exit strategy is imperative to ensure you present a solid case to lenders. 

You can use a Belgian bridging loan to release equity from unencumbered real estate in Belgium.

Not all lenders offer equity release against Belgian property, especially if you have a high-value home or residence. However, some are familiar with offering this and can provide large loans. Equity release can be used to create liquidity for a variety of reasons, such as investing in securities or private stocks, purchasing assets, acquiring additional real estate in Belgium or abroad, consolidating debt or solving short-term cashflow issues. One of the benefits of this type of finance is that you are not obliged to deploy the loan capital within Belgium – you can secure the loan on Belgian property and utilise the funds abroad.

If you plan to use equity release, it is vital to have a well-thought-out plan for managing the funds and exiting the loan. Your lender must be confident in your ability to manage the capital you borrow and pay back the loan successfully at term.

Bridging finance is a short-term financing mechanism; therefore, the repayment is different a longer-term product such as a mortgage. With long-term and conventional lending, you pay back the capital (and often the interest) over time. However, with bridging loans, the loan will effectively be due as a lump sum. To settle this liability, you will need a significant amount of capital, therefore lenders will want to understand precisely how you plan to do this.  

There are plenty of options for paying back a bridging loan – this process is also called your exit. These include:

Refinancing

Refinancing is one of the most common methods of repaying a Belgian bridging loan. In this scenario, you refinance with another lender at term, usually switching to a longer-term property finance package – this is most commonly a mortgage but could also be another finance product. In these cases, your new lender will pay off your bridging loan, and you will then repay your new loan via the terms set by your new lender. If necessary, Enness can arrange a refinance package while brokering your bridging loan, which can provide lenders with additional stability and demonstrate an exit plan.

Disposal of property

Bridging loans can also be paid off using the proceeds from a property sale. This can either be the property the loan is secured against or by selling another property in your portfolio, provided it covers the capital and any other applicable fees.

Use Other Assets/Capital

You can also repay a Belgian bridging loan by using capital from another source. This could come from any liquidity event. Liquidity events cover a broad range of circumstances, but include, for example, the sale of other assets, sale of other property in your portfolio, the sale of a business, liquidating securities, receiving an inheritance or divorce settlement. As long as you receive funds in a way that complies with local and international regulations, lenders are generally less focused on what the event is and will be more concerned with the specificity of the event. They will want details of how certain you are that the liquidity event will happen, when it will happen and what capital you will have available when you receive the funds.

Many lenders that offer Belgian bridging loans are usually international players, meaning that they often have a global outlook and can adapt to cross-border financing requirements. Therefore, you may be able to secure a loan against a property in Belgium, with lenders allowing you to use the loan capital in another country – either in Europe or further afield. This means you can use Belgian bridging finance to create liquidity for global projects or as a way to release equity in Belgium and use the loan abroad.  

If you are planning to use the loan outside of Belgium, it may be more practical to borrow in another currency that isn’t euros. Lenders offering Belgian bridging loans and equity release typically offer pounds sterling, Swiss francs or US dollars as standard and may be able to cater to other currencies.