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What Is Bridging Finance?

Bridging finance is a short-term loan secured against a property. Bridging loans used to be used exclusively in property transactions, but today, you can use this flexible type of finance for various purposes.

Used to release equity tied up in a property, you can use the proceeds of your loan to renovate real estate, buy a new home before your current home sells, make investments, buy assets, pay off debts and so on. There is almost no limit on how you can use this type of financing.

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How Enness Can Help

Enness is considered a leading high-value bridging finance broker. The team can help you to:

  • Secure an offer for a bridging loan within 24 hours
  • Use any property as security for the bridging loan
  • Borrow significant capital – there is no maximum loan amount
  • Benefit from low interest rates (around 2.7% - 2.5% per year)
  • Secure bridging finance against property in Monaco, the UK or internationally
  • Access regulated and unregulated bridging loan lenders

Bridging Finance: Is It Right For You?

Bridging loans are a popular and cost-effective way of borrowing. You will find that Enness will be able to arrange a loan that is suited to your circumstances - your broker will source, negotiate and build a bridging loan from scratch to meet your needs. Bridging loans are quick to organise, and you can often draw down funds in 1-2 weeks.

Bridging finance is increasingly known as one of the most flexible types of finance. These types of loans are frequently used by high-net-worth individuals who employ them in situations where time is of the essence or if they encounter a temporary cash-flow challenge. These loans can also be used when traditional lenders are unable (or unwilling) to lend.

Enness has an expert team of bridging loan brokers who will explain the advantages and potential pitfalls of this financing mechanism to you. From the moment you get in contact, Enness will work alongside you, working exclusively in your best interests to obtain the best rates and terms for you. Your broker will help save you time, costs, and avoidable hassle at every point in the transaction.

When Can You Use Bridging Finance?

Bridging finance used to be used exclusively to buy a property before your old home had sold. Today you can use it to generate capital or create liquidity through the equity you have in property (as well as to buy a new property before your old home has sold). However, most lenders on the market only offer bridging finance to allow borrowers to buy or sell houses. Enness has access to the lenders that will be able to lend for your envisaged project, whether it involves buying property or not.

Enness can help broker:

  • Bridging finance secured against property in Monaco
  • A bridging loan against real estate in the UK
  • Bridging finance secured against property in other, international locations (e.g., France)
  • Cross-border bridging finance (e.g., secured against a property in Monaco but funds are deployed internationally)
  • Regulated and unregulated bridging finance
  • High-value loans of €3 million or more
  • Very short-term bridging finance (a few weeks)
  • Bridging loans for borrowers with highly complex backgrounds

Bridging Loans: Interest Rates

Bridging loans are frequently structured so that the monthly interest rate is a proportion of the loan amount as a percentage. For example, this could be 0.45%, 1%, or 2% each month.

You can pay the interest rate in three ways:

Retained Interest

Your interest payments are subtracted from the total loan amount and used to cover interest costs when they arise, meaning you effectively pre-pay the loan interest.

Rolled-up Interest

Instead of paying a monthly interest payment, you pay interest on the outstanding capital (calculated monthly) and pay it back when the loan needs to be repaid.

Serviced Interest

Just as with a regular mortgage, you'll need to pay the interest for a bridging loan every month.

The total cost of your loan, your cash flow, and the amount you can borrow will all be affected by how you pay interest. Enness will discuss what type of interest structure will work best for you based on your scenario and will seek out your preferred alternative from lenders to guarantee you are in the best possible position.

Exiting A Bridging Loan

When your broker approaches lenders, they will need to know how you plan to "exit" the loan. Your exit refers to how and when you plan to pay back the capital you have borrowed.

There are lots of options, but generally, these will be:

Refinance - you take out a new (usually long-term) loan with a lower interest rate, and your new lender will pay off your bridging loan.

Property sale - you sell your property, and the sale proceeds are used to repay your bridging loan.

Other asset sales - to repay your bridging loan, you sell property, assets, stocks, shares, or business holdings.

Enness regularly works with individuals in Monaco and understands the unique requirements and needs of borrowers who reside in the Principality. Enness will take the time to get to know you, your goals, and your financial situation. Your bridging financing broker will cover your options with you and help you put together a plan of action. Whatever method you choose to repay the loan, keep in mind that this is a short-term financing option, and the interest rates will reflect that. If you need a longer-term borrowing solution, Enness can assist you in locating and negotiating alternative finance packages for you.

How Does Enness Help?

It's challenging to navigate the bridging loan market on your own, especially if this is your first time using this form of financing. Things will be even more complex if you are based in Monaco and are trying to organise finance to deploy internationally. If you have UK property, you will find many lenders to choose from, although many will only offer generic bridging finance arrangements. Some lenders provide bridging loans against property in Monaco (or abroad), but these parties prefer introductions from brokers and often cannot readily accept individuals that approach them directly.

If you choose to work alone, be aware that bridging loans are complex transactions that are constantly moving. Keeping on top of all the players involved in the deal is exceedingly difficult, and it can be stressful without support. Enness' brokers will handle as much of the administration as possible, so you are free to focus on your other interests or work, saving you precious time.

Your broker has access to the whole marketplace and will approach the lenders most likely to meet your requirements and offer you the best deal in terms of cost. Your bridging finance broker will be working alongside you every step of the way, keeping the plan on track, and working diligently to bring you the results you need and get the deal completed on time.

Bridging Finance For Property Auctions

Property auctions remain relatively rare in Monaco, but they are popular in other prime markets, and it is possible to snap up a good deal on property. The UK, in particular, is well-known for its auctions, especially at the top end of the market.

Organising finance in advance will be imperative if you wish to buy a property at auction. While you can purchase auction property in cash, doing so may not be fiscally advantageous. Your advisors will give a more detailed insight that is relevant to your specific situation, but often, financing is suggested from a planning and financial perspective.

If you choose to finance auction property, you will need to ensure that a lender will let you borrow in advance. You will usually need to pay the balance of the property at most, 30 days after the auction, but sometimes less. Bridging finance - also called auction finance - is ideal in such scenarios. You can use the loan to finance the initial sale of the property and then refinance at a later date, switching to a longer-term and cheaper loan - usually a standard mortgage.

Before the auction, your bridging loan broker will negotiate an in-principle bridging finance offer for you. With this knowledge, you'll be in an excellent position to make the best bid possible, depending on how much you know you can borrow and how much of your own capital you can put forward.

Bridging Finance For Property Development

Bridging finance is often used by property developers who are building or renovating property. Bridging finance is most commonly used for this in the UK, and you can use this type of finance for both substantial projects (building multi-family homes or commercial property or large-scale renovations) or for smaller personal projects.

In Monaco, its uses are more limited, given that property developments are approached differently, and building plots and permits are scarce. That said, property development finance (simply another name for bridging finance) can be used if you want to use equity tied up in a property to renovate or refurbish a property in the Principality.

Enness is also able to broker international property development finance. Practically, we help Monaco-based individuals release equity in international real estate for property development projects. This is usually in against property in the UK. However, it is possible to secure the loan against global property in your portfolio to develop property in another country, be that the UK or Monaco. Enness can broker both commercial and residential property development.

Large Bridging Loans

Working with a broker is often the best way to get the most competitive deal if you want to borrow a significant amount of capital. Many Monaco-based individuals want to use bridging loans to raise substantial capital - €3 million or more.

Few lenders operate in this part of the market, and those that do can’t always cater to international borrowers. The fact that you, your property or the capital may be based outside the UK can be enough to make a lender hesitate. If you want to borrow a significant amount on top of that, things often grind to a halt.

It is very possible to borrow significant amounts when it comes to bridging finance, even if you are based in Monaco or own property in the Principality that you want to use as collateral for a loan. That said, knowing which lenders to approach, how to negotiate the deal and how to present your case is the difference between an average deal and a very competitive package.

Enness’ team will broker very significant finance against international property or property in Monaco.

Cross-border Bridging Loans

Many lenders don’t have any appetite for international lending in bridging deals. Borrowers outside the UK (where most of the lenders are based) often find themselves short of options, even if you want to secure the loan against UK property or if you are a UK national. For international deals, working with a broker who can source and negotiate this kind of finance will ensure you benefit from the best rates and terms and sometimes, if you are able to access finance at all.

Enness are experts in negotiating cross-border finance. No matter how much you want to borrow, if you want to deploy capital in Monaco or elsewhere in the world and wherever your property is based, Enness will be able to broker cross-border bridging finance.

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Contact Enness

If you have questions about bridging finance or if you would like to explore potential use cases or simply understand more about how this finance works, get in touch. One of Enness’ bridging brokers will be in touch to have an informal chat about your needs and talk in more depth about any questions or queries you have.

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