Bridging Finance

Bridging Finance plays a vital role in the global property market and we are experts in its use.

We have completed some of the highest value, sensitive and complex bridging finance transactions, and have access to an unlimited number of lending solutions.

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What is A Bridging Loan?

What Is A Bridging Loan?

Do you need short-term finance? Are you a client looking to up-size your family home or someone looking to down-size? Perhaps you're a property investor looking to refurbish your property? Then a bridging loan may be for you.

Watch Vice President, Chris Lloyd, discuss the benefits of bridging finance and how we at Enness can make this a possibility for the right clients.

What is Bridging Finance?

Bridging finance is a short-term mortgage secured against property. It is individually negotiated and is usually very fast to arrange. 

It usedto be a very niche product, with lots of negative connotations due to its price. Its main purpose was to allow people to complete on new property purchases before selling an existing home.

Now, however, its use is unlimited. It is a key finance product used wherever mainstream lenders won't, or can't lend. It's a problem solver, an opportunity creator and, in some places, a get out of jail free card.

As for the price - it's negotiable and often nowhere near as expensive as it once was.

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What is Bridging Finance?
How Are Bridging Loans Used?

How Are Bridging Loans Used?

The uses of bridging loans are as follows:

  • If you need a fast offer of funds or need to complete a transaction quickly
  • You are buying a property which is un-mortgagable or has a complex title
  • You can't access the main finance lenders due to an unlimited number of reasons
  • You need to release equity from a property you own quickly before you refinance to another lender
  • You want to complete a refurbishment on a property before selling it or refinancing it
  • You don't want to go through a long and granular mortgage application with a traditional lender 

Really, however, bridging finance can be used in a multitude of scenarios and for practically any reason.

How Are Bridging Loans Used?

Bridging finance is a short term solution

Bridging loans should only be used as a short term solution and not for the long term.

Every lender will be very interested in how you intend to "exit" the loan - how will you eventually repay it.

The main options generally are:

  • Refinance - arrange for another lender to repay the bridging loan with a new loan at a much better interest rate. 
  • Sale of the property - often bridging loans are repaid out of the sale proceeds once the property is sold - this, however, can be an unknown timeline.
  • Sale of other assets - other property, other assets, stocks/shares or business holdings.

We work with the entire market place and will take the time to understand you, your plans and your financial position so that we can not only answer the question of how you will exit, but also deliver that plan for you.

Bridging finance is a short term solution
Regulated and unregulated bridging loans

Regulated and unregulated bridging loans

Regulated bridging loans are secured against a property which you have, do or will live in, or a property where a family member will reside.

These loans are regulated by the FCA and the rules around affordability apply - i.e can you afford the monthly payments and how will you retain them.

Unregulated bridging loans are secured against every other property type or use - Buy to lets, property developments, commercial assets and so on.

We cover both sides of the market so you can be sure you are getting the correct advice. 

Regulated and unregulated bridging loans

Rolled up, retained or serviced interest payments

Bridging loans are often structured so that the interest rate is a percentage of the loan amount payable on a monthly basis.

For example, 0.45%, 1% or 2% per month.

There are 3 ways to pay this amount:

Retained Interest 

In this approach, the interest payments are deducted from the gross loan amount and are used to meet the interest costs as they accrue - i.e, you pre-pay the interest from the loan.

Rolled Up Interest 

Here, each monthly payment is added to the capital outstanding on a monthly basis and you pay it all back when the loan is repaid.

Serviced Interest 

This approach means that the borrower meets the interest cost monthly as one would with a traditional mortgage.

These structures of the loan are vitally important in terms of the total cost of the loan, the cash flow of the borrower and how much can be secured against the property. 

We will work through these to make sure that you are in the best position possible.

Rolled up, retained or serviced interest payments.
Bridging Finance Guide

Bridging Finance Guide

Essential reading for anyone interested in bridging finance, this guide will help you determine whether it’s the right choice for you.

This Guide Covers

  • Lenders in this Space
  • High Loan-to-Value Bridging
  • International Bridging Loans
  • Foreign Exchange for Expats & Foreign Nationals
  • Different Products for Different Needs
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