10 things you need to know about Bridging Loans (continued)

As the name suggests, Bridging Loans are typically used to bridge the gap between selling and buying, but if negotiated correctly, can be used as a powerful tool to facilitate multiple and complex transactions.

We continue from our last blog and present 5 more things to know about Bridging Loans.

 

6. To upgrade or downsize a property
   

If you’re upgrading or downsizing and have a sizeable amount of equity in your home, a Bridging Loan enables you to borrow finance to buy a new property, before selling your existing one.  If you genuinely think you’ve found ‘the one’, it means you won’t miss out, and the set-up fees and interest are worthwhile in the long-term if it means you secure your once in a lifetime property. We helped a couple in their retirement to secure bridging finance to downsize from a £5m Notting Hill house to a £2.75m property in Surrey, whilst avoiding the stress of buying and selling at the same time. Read the case study here.

 

7. All large Bridging Loans (at least the good ones) are bespoke

If you’re looking for a large Bridging Loan, chances are you’re already moving in multiple lanes and your financial needs and situation are unique to you.  This means the standard finance options offered by the big banks simple aren’t an option, and you need to look to specialist lenders who will take the time to understand your unique set of circumstances and financial case.  If a lender isn’t willing to do this, move on, or work with an expert to pre-empt lender concerns and present your borrowing needs and development plans in the most compelling way possible. Read the case study here.

 

8. There’s more to consider than pricing and leverage

Whilst pricing and leverage are of course key, you need to dig deeper to secure the best deals. For large, specialist loans, the contractual Ts & Cs and loan covenants are just as important, if not more so.  They can also be complicated and onerous, which works to the advantage of the lender.  Working with an experienced broker means we can unravel the detail for you.  We know where there is and isn’t room for negotiation, so we can shape the terms to suit you, rather than the lender. There’s no case study on this one, as we can’t give away all our secrets!

 

9. Using 2^nd charges to help fund other assets

Second (2^nd) Charge Bridging Loans are a great way to access equity in a property without having to replace your full 1^st charge. This can be particularly useful if you’re looking to pay a deposit for a new site, funded by equity in lieu of cash.  We helped a BTL development client who was looking to access equity for a deposit without losing the favourable rates he had secured on his mortgages, pre-crash. We were able to arrange a bespoke Revolving Credit Facility secured on a 2nd charge basis across 11 properties. He then used the equity for a deposit, making it a 100% cashless deal. Read the case study here.

 

10. To secure finance against multiple asset types

Most lenders will have an asset type they prefer, be it residential, BTL or commercial. Securing a Bridging Loan for a development with mixed assets can get complicated if you start involving multiple lenders with multiple rates, and it just takes one to derail the entire deal.  Even larger lenders who can finance different types will split the loans across different departments, making communication slow and the process disjointed.  With the right contacts however, it is possible to secure one loan for multiple asset types; the key is to look beyond your usual lender to find one with the right flexibility. Read the case study here.

 

So there you have it – Our Top 10 Things to know about Bridging Loans. If you’d like to discuss a Bridging Loan, please contact us on 0207 486 0184 or via the Contact Form.