Bridging loans are prevalent in the UK. They 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 mechanics of a Portuguese bridging loan aren't different from a domestic bridging loan in the UK. Essentially, a lender will simply offer you a short-term loan secured against property in Portugal.
While the basis of a Portuguese bridging loan is relatively simple, it's important to remember that local laws and regulations will still be applicable. This may affect how bridging finance works or how you can use it. It is imperative to understand how Portuguese laws may differ from those in your home country or country of residence and realise what the material effect of these will be (if there is any material difference at all). Your broker will be able to talk you through what you need to know based on your specific situation, but things to consider will include how real estate is bought and sold in Portugal, your fiscal position, potential liabilities and responsibilities, and the local legal system. Enness can connect you with the advisers you will need to work with to complete the deal if you are not already working with a team – 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 quickly. Your broker will act as a Centrepoint, keeping all parties involved in the deal moving at pace and ensuring everyone delivers what they say they will, when they say they will.
Bridging loans in Portugal can be secured against commercial or residential real estate, although residential bridging is more typical. It is always a short-term lending vehicle, lasting from just a few weeks to three years at maximum.
Whatever your motivation for pursuing this kind of finance and whatever you want to achieve, one of the essential elements of this type of loan is your exit strategy - in other words, how you will repay the loan. A clear strategy of how you will manage the funds is also vital.
It is worth noting that a Portuguese bridging loan will almost always be more expensive than a long-term mortgage or other types of conventional property finance. However, the cost reflects the very broad range of objectives you can achieve using this type of finance. The cost of a bridging loan will also reflect the expertise a lender needs to deliver a loan secured against international property – this is particularly relevant given there are very few domestic Portuguese lenders in the space.
Although these types of loans can be more expensive than conventional property finance, 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. In many cases, the slightly more expensive cost of a bridging loan is more than offset by the opportunities it allows.
You can use Portugal bridging finance to:
- Complete Portuguese property transactions quickly
- As an alternative financing method to a mortgage or other types of property finance
- To finance a property purchase in Portugal quickly if you stand to lose a deposit
- To create liquidity to allow you to purchase a home in Portugal before another property has sold
- Release equity (including significant loans) from a residence you own in Portugal