Jersey Bridging Finance Brokers

A short-term financing solution, bridging loans last from a few weeks up to about three years at maximum. Known for being quick to arrange, it’s possible to access funds in a matter of days or weeks. Commonly used by high-net-worth individuals who need to access capital quickly, bridging finance is often known for being a problem solver and an opportunity creator. Because the underwriting process for a bridging loan is more straightforward than for other types of lending (including mortgages), bridging finance is often used if other lenders have turned you down or can’t let you borrow.

As with any kind of lending, there are drawbacks and benefits, and it’s important you understand what these are before you push ahead with a bridging loan. Enness’ bridging finance brokers will work alongside you to answer your questions, explain more about bridging finance, and help you understand if they are a good fit for you. Based in Jersey and with offices around the world, Enness will secure the very best bridging finance deal for you, getting the transaction over the line as quickly and efficiently as possible.

Borrowers will usually pay the interest rate as a percentage of the loan amount. This rate is usually calculated on a monthly basis. For example, 0.45%, 1% or 2% per month.

The interest rate can be paid in three different ways:

Retained Interest

Interest payments are deducted from your gross loan amount and are used to cover the interest costs as they accrue – in other words, you are pre-paying the interest on the loan.

Rolled Up Interest

Rather than paying interest monthly, interest is added to the outstanding capital. This is usually calculated monthly. You will pay the interest back – along with the outstanding capital – in a lump sum at term.

Serviced Interest

In this case, you will be required to pay the interest cost each month, just like you would with a mortgage.

While the differences in how you can potentially repay interest can seem relatively trivial, they can influence how much you will pay in total and how much you can borrow. Interest repayments will also affect your cash flow, so understanding which method will be most advantageous to you and negotiating to pay interest in the way that is most beneficial to you, can be very advantageous. Your bridging finance broker will explain your options and help you understand what each would cost you. Then, they will work with lenders to deliver your preferred option.

How you pay back your bridging loan is known as your exit. There are a few common scenarios, which include:

• Selling the property the bridging loan is secured against. You would then use this capital to repay your bridging lender.
• Refinancing. In this case, borrowers usually negotiate a longer-term lending option. The bridging finance provides you with headspace and time to get the best long-term finance deal and not have to feel pressured by the time it takes for your application to be accepted by a lender, which is very common. Refinancing is especially useful if you know you can secure long-term lending, perhaps from your bank or another lender, but closing the deal is the element which takes the longest. Your new lender will repay the bridging loan, and you will then go on to pay back your new lender with a different type of loan – often a mortgage or long-term finance vehicle.
• Sale of other assets or a liquidity event. You can repay the loan by selling assets, property, securities or business holdings to repay your finance. If you have a liquidity event (divorce settlement or an inheritance, for example) you could also use this capital to repay the loan.

How you exit your loan will be very important to your lender – they will want to feel confident and comfortable that they will get their money back. You will need to have a feasible and understandable plan of action for your exit that a lender can get behind. Your bridging finance broker will talk you through your options and will approach the lenders that are best for you and that can cater to your situation.

Bridging loans can be a hugely beneficial and useful financing tool. However, finding the best bridging loan on the market isn’t always straightforward, especially if you are operating alone, approaching lenders one by one. Deals are often difficult to compare and handling the entirety of the transaction yourself is often daunting. With access to all the bridging finance lenders on the market, Enness will go straight to the source of the best rates and terms, based on your requirements, scenario and background.

From Enness’ base in Saint Helier, the team will be on hand to support you every step of the way. Enness is able to broker bridging finance regardless of your nationality, the complexity of the deal or where the property is that you will use as collateral. After successfully securing a competitive bridging finance package, when the deal is underway, Enness will help you stay on top of the transaction, making sure all parties (legal teams, valuers and lenders) are working together to keep to the timescale agreed. Every step of the way, Enness will be working exclusively in your best interests and handling anything that comes up during the negotiations and close. Wherever possible, Enness will shoulder the administerial burden of the deal, whilst keeping you up to date with any developments or points of attention.

These days, buying at auction is more and more common, either in Jersey, in the UK or elsewhere in the world. For sellers, it’s a quick way to sell property. For buyers it’s a great way to pick up a (relatively) bargain property.

Most auction buyers don’t have anything like enough cash to buy a property with the capital they have sitting in the bank. However, auctions are, of course, binding. If you win a bid, you’ll need to put a deposit down immediately and then you’ll have three weeks or so to pay in full. A traditional mortgage takes much more than three weeks to arrange, and as a result, you’ll need to find an alternative solution for financing the property purchase. A common solution? Bridging finance.

If you know there’s a property you want to buy at auction – either in Jersey or elsewhere - involving Ennessas early as possible will work in your favour. With plenty of time before the auction, your bridging finance broker will seek out an in-principle bridging finance option for you. This is important as you’ll know what you can spend on the property and how much you can afford to bid.

Properties financed at auction can sometimes be dilapidated or in need of renovation work. Auction finance will also be available to you if you want to buy a property that you will later develop or restore. Even if you are a first-time developer, Enness’ bridging finance brokers will be able to negotiate a competitive finance package for you. You may have to provide more collateral if you are a first-time developer, but by no means is auction finance out of bounds for you.

Developers also use bridging finance, and many use it for Jersey builds or to develop property in the UK. Bridging finance is typically used to fund the development of the property and in many cases, buy the land that the property will be developed on. Often, bridging finance is used to consolidate loans from various lenders who have funded different parts of a development, making payments easier to manage.

Enness brokers both commercial and residential property finance and will be able to secure capital for you whether you are a seasoned developer or developing real estate for the first time. If you are a first-time developer, expect that you may need to put forward more collateral, or you may not be able to borrow as much as a more seasoned developer. Borrowing will be very possible for first timers, but lenders will want to ensure you can handle the development project, stay on time and under budget, and as a result, they are likely to offer less finance than a developer with a track-record.

Any bridging loans used for a property development will need to be negotiated on a case-by-case basis. Lenders will want to understand your plans, your exit, development costs, the location of your development and the current and future price of the property.

Enness has access to all the leading lenders in this specialist part of the market. Enness will also be able to help if you need a financing solution to a cash flow or capital problem that’s arisen during your property development.

Whatever you need property development finance for, your bridging finance broker will ensure you have the funds you need, when you need them and secure you the best deal available on the market.

Bridging finance originated in the UK, and it’s widely used across the UK and Channel Islands. However, it can also be used internationally, and whether you are buying a property in Jersey, the UK or abroad, you will find that bridging finance offers you considerable options and a lot of flexibility. As well as being regularly used for international property purchases, bridging finance is often used for raising capital to pursue an opportunity or solve a problem – whether that’s at home in Jersey or abroad. Often, the scenario for which you want to borrow, and the location of the property you want to secure the bridging finance against will also influence how much, and sometimes if, you will be able to secure a loan.

If you are using bridging finance internationally, you’ll need to tread carefully. When it comes to bridging finance, Jersey and the UK are very similar, but outside of the UK, things may well be different. If you wish to use bridging finance for an international transaction (be that to buy property in another country or for another reason) don’t expect things to be exactly the same as in the UK.

If you are interested in international bridging finance, Enness’ team will be able to work alongside you to support you and cover all bases to ensure an international transaction goes smoothly. Enness’ bridging finance brokers can help you negotiate the best deal and navigate things like your foreign exchange risk and which legal advisors or valuers would be able to help you.

It’s not unusual to see very large bridging loans in the UK and Jersey. However, not every lender has the appetite to cater to very large bridging loans, and you may struggle to secure finance for more than £1 million if you are approaching lenders yourself. If you have a complex scenario or background, often, finding a lender will be very challenging – not every lender is able to cater to unusual borrowers, structures or scenarios, especially at the top end of the market. Lenders can cater to very large bridging loans, but the specialist lenders that operate at the top of the market are often harder to reach through the usual channels. Particularly if you are borrowing a very significant sum of money, you may well need the support of a partner like Enness who can help manage the deal alongside you and make sure everything comes together.

There are fewer lenders in this specialist part of the market, and Enness will be invaluable in getting you the most competitive offers and maximum flexibility. Your bridging finance broker will handle negotiations and ensure your loan is tailored to your situation and meets your needs. Then, they will keep the deal on track and work with the other parties involved (your legal team, the surveyor, your lender, etc.) to see the transaction through to completion smoothly.

Just because you need a large loan, that doesn’t mean you’ll have to endure a lengthier transaction: Enness will be able to secure offers for large bridging loans as quickly as possible and always within the timeframe you need.

There are two types of bridging loan: regulated and unregulated. Regulated bridging loans use a property you live in today, or will live in in the future, as collateral. If you use a property that you’ve bought for a family member to live in as collateral for a loan, that would also count as a regulated bridging loan. Regulated bridging loans fall under the oversight of the FCA, and therefore, there are rules around affordability. If you need a regulated bridging loan, lenders will look very carefully at your income and net-worth to ensure you can pay back the loan comfortably.

Unregulated bridging loans encompass every other type of property. This might be residential property, which includes buy-to-let property, investment property, a holiday home, development or commercial property.

Whether you need a regulated or an unregulated bridging loan, Enness will be able to help. Your broker will have contacts in every part of the market – from regulated to unregulated and for high-value loans to bridging finance for just a few weeks or months.