French Bridge Loans

The principles of French bridging finance are very similar to domestic bridging loans in the UK. At the most basic level, a lender will offer you a short-term loan secured against your French property. However, as with any international finance, it's important to remember that local laws and regulations can be different than in your home country, whether that country is the UK or elsewhere. It is essential to understand these differences and how you will be affected by them. This includes how French property transactions take place, French taxation, ownership, what your liabilities are, and what legalities and regulations you need to consider. Enness can talk you through these elements and connect you with the advisers and professional service providers you need if you do not already have a team in place. Enness will always be working on your side in a French bridging loan and will liaise with all the partners involved in the deal to keep the transaction moving and to ensure everyone delivers on time.  

French bridging loans can be secured against commercial or residential property, although residential bridging is more common. Bridging finance is always a short-term lending product, lasting from a few weeks or months, up to about three years.

You can use French bridging finance to:

• Complete French property transactions quickly
• As an alternative to a mortgage or other international or domestic property finance
• To buy property quickly before you lose a deposit
• To create liquidity to allow you to purchase a home in France before another property has sold Release equity against a residence you own in France

A French bridging loan is not the right solution in every scenario. Enness will always talk you through your options so you can make an informed decision about whether this type of finance is right for you. 

A bridging loan can be a great avenue to explore if you want a short-term loan to deliver a specific result or outcome. That might be if you want to complete a French property transaction quickly or raise the capital you need to buy real estate in France before you've sold another property. Whatever your reason for considering this type of finance, lenders will be looking to ensure you have a strong exit plan and understand how you will handle the borrowed funds.

Because it's a more versatile financial product that can be used in various ways and to accomplish (often reasonably ambitious) goals, a bridge loan is almost always more expensive than a long-term mortgage or conventional property finance. However, lenders price French bridging finance competitively based on how you will use your loan, how much you want to borrow, and the speed with which you can draw down funds. 

How you will use your French bridging loan, the value of your property, and the planned exit will all be elements that will affect how much you can borrow. Some lenders have a maximum LTV of around 60 or 65% for a French bridging loan – others will have a lower limit. Your financial background or requirements may also influence how much you can borrow.

Although delivering an international bridging loan can be more complex to arrange than in the UK, the lenders that offer this type of finance can provide large loans against high-value French property. Loans of a million pounds or more are a distinct possibility. Most French bridging finance lenders can also accommodate loans that include various ownership structures and lending even if you do not reside in France full time or are not a French citizen. Your nationality and residence are not usually barriers to your ability to access French bridging loans, provided you meet compliance and legal requirements. Whatever the scenario, Enness will negotiate and approach the French bridging finance lenders to secure the largest loan possible for you.  

Bridging finance is prevalent in the UK but less so abroad. In recent years, however, there has been an increased demand for lenders to provide French bridging loans. This has been fuelled, in part, by UK borrowers who understand the benefits of bridging finance and want to use it in France. Non-resident and foreign nationals who own property in France are prevalent, especially in Paris, the Alps and the Cote d'Azur, and many of these individuals also want to use bridging finance.

Although many lenders are active in the bridging industry, international bridging is still a relatively niche sector within the market. The lenders that offer French bridging loans are specialists that tend to focus almost exclusively on international bridging. These lenders have a great deal of expertise working with overseas property owners, non-resident owners and foreign nationals, and they are set up to deliver loans in deals that include international structures. 

When it comes to French bridging, you will almost always need a tailored loan instead of a packaged product, which may not meet all your needs. Whatever the scenario, Enness will approach the lenders that will offer you the most competitive French bridging 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 work with all the parties involved in the loan to ensure everyone is working towards the same goals and all players come together to complete the transaction as quickly as possible.  

You can use French bridging finance in different ways. You may want to buy French property quickly. Alternatively, you may be seeking an alternative financing arrangement to an international mortgage, or you may wish to release equity from property you own in France. You can use French bridging finance to achieve all these outcomes.

Advantages of French bridging finance include:

Speed

One of the main benefits of a French bridging loan is that lenders can complete these loans quickly. In many cases, you will be able to draw down funds in just a few weeks. Because of the speed with which lenders can deliver these loans, it can be a much faster way to finance a French property purchase than with a domestic or international mortgage. You may be considering a French bridging loan if you need to buy property quickly or if you need to secure finance before you lose a deposit on a French property.

French bridging lenders move quickly at every stage of the deal – from the initial lending decision to arranging the transaction, allowing you to draw down funds as fast as possible. Lenders can complete these loans in as little as two to three weeks.

No Requirement For Assets Under Management

Most international private banks require assets under management as part of high-value French mortgage packages, and these lenders often require quite significant funds. French bridging lenders to not require AUM which may be advantageous to you for a number of reasons.

Flexibility

Bridging is a versatile financing product; you can use these loans to achieve various outcomes and solve problems. Where you can only use a mortgage to buy property, for example, you can use bridging loans in more diverse ways, including to: 

• Buy French real estate 
• Buy international property using a loan secured on a French property 
• Create liquidity quickly
• Consolidate French or international debt
• Invest in securities, stocks, shares, bonds or a business
• Buy other assets

Whatever you want to achieve, you need a defined plan of what you will do with 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., using loan capital outside of France), this will be particularly important. 

Large French Bridging Loans

There are French bridging finance lenders who offer both large and small loans. There is no limit on how large or small a loan Enness can broker. It is also worth noting that some lenders will provide significant large bridging loans secured against French property – loans of €1-€5 million (or more) are possible if your property and your financial background support this. 

Price

Any international bridging loan will be more costly than a domestic UK bridging loan. This is because lenders usually need more technical skills to operate internationally than lenders that operate exclusively in the UK. The cost of a French bridging loan will usually be higher because of this and because it requires more expertise to deliver.

Bridging loans – in France or not – are more expensive than longer-term finance like a mortgage. That said, bridging finance is only ever used when you want to achieve a specific outcome. You may need to access liquidity quickly or are faced with a scenario where you cannot – or do not want – a more conventional or longer-term loan. Rather than comparing the cost of bridging finance to conventional loans like a mortgage, it can be helpful to view the cost of a bridging loan through the lens of what it will help you achieve and the doors it will open for you. You can use French bridging finance to release significant equity from French real estate, buy property in France or abroad, consolidate debt and create liquidity to solve problems at pace. Sometimes it is the only financing mechanism you will have to reach an outcome or make something happen. You should always consider how much French bridging costs and all your options, but in many cases, its relative expense is well worth it, considering the overall conclusions possible. 

Fees

As well as the cost of the loan itself, bridging finance will also incur other fees, usually including legal costs, lender fees, valuations, arrangement fees and other liabilities. 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. Enness will walk you through all the fees you will incur if you take out a French bridging loan upfront, so you understand exactly 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. You may lose your property if you can't keep up with repayments. Having a plan of how you will manage the loan and exit is imperative to ensuring your French bridging loan is a success.  

You can use French bridging finance to release equity from unencumbered French real estate. Here, the lender will use your French property as collateral for the loan.

Not every French bridging lender offers equity release, but those that do usually allow you to use the capital in a variety of ways. The lenders that offer equity release can provide sizeable loans – upwards of a million euros is possible. You can release equity to invest, purchase assets, acquire real estate in France or abroad, invest in a business, consolidate debt (in France or abroad), or solve short-term cash-flow issues. One of the benefits of bridging loans in France for equity release is that you are not obliged to use the loan in France – you can use the funds elsewhere.

When it comes to equity release, having a well-thought-out plan for managing the funds and exiting the loan is essential. Lenders must be confident in your ability to manage and pay back the loan successfully.

Bridging finance – whether in France or elsewhere – is always a short-term financing option. As a result, how you repay these loans differs from how you would repay a mortgage or another type of more traditional finance product. With long-term and conventional lending, you will pay back the capital over time, but this is not the case with bridging loans, where the loan will effectively be due as a lump sum. Because you will need a significant amount of capital to repay the loan in one go, 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 will include:

Refinancing

Refinancing is one of the most common methods of repaying a French bridging loan. Here, you will take out a loan with another lender, usually switching to a longer-term (and therefore less expensive) loan. Your new lender will pay off your French bridging loan, bringing your agreement to a close. Enness can often arrange for a refinance at the same time as negotiating your French bridging loan if it is helpful for you and serves to provide additional confidence to lenders.  

Sell Property 

Another common way of exiting a French bridging loan is by selling the property that your loan is secured against. You will usually take this path if you took the loan to raise capital quickly or to raise finance to buy a new property before your old home has sold. If you opt for this route, lenders will be looking carefully at the demand property in the area where your property is located. 

Use Other Assets/Capital 

Another option for repaying a French bridging loan will be to use capital from another source (sale of other assets, sale of other property in your portfolio, a liquidity event) to repay the loan capital. Lenders are very open to bridging loans being repaid this way, including in scenarios where this is done via a divorce settlement, inheritance, sale of securities or a business, etc.  

The lenders that offer French bridging loans deliver finance internationally – they use your French property as collateral, but they will not necessarily be based in France. This international outlook will work in your favour, given most lenders are open to considering loans where the capital is deployed outside France.  You may want to use the loan to buy property outside France, invest in international markets, consolidate international debt or create liquidity for a project abroad. In all these scenarios, a loan in euros may not be advantageous for you.  

Especially given many French real estate investors (especially those that buy in Paris, the South of France, or the Alps) may not be residents in France and may want a loan in another currency, more lenders offer multi-currency lending. Loans in euros are standard in French bridging finance deals, but you will also be able to secure the finance on French property and draw down your loan in pounds sterling, Swiss francs or US dollars, for example.