Not every property project runs to time. Not every property project is completed by the end date of a bridging loan used to finance it, no matter how experienced an investor, landlords, or developer.
If you’ve borrowed money using a bridging loan and you‘re concerned that you won’t be able to repay the loan in full on or before it’s due, talk to Redrock Commercial Finance about applying for a new bridging loan to replace the current one – a refinance bridging loan.
20% of all bridging loans approved in the UK are used to refinance previous bridging loans whose repayment date is near. Refinance bridging loans are a way for borrowers to buy extra time when they need it.
As a result, a secondary market has developed among bridging loan providers to refinance borrowers’ loans and, by working with Redrock, you have access to the very best refinance bridging loan products available – competitively-priced and on the most favourable terms.
Call us on 020 3780 7610 or click here for our contact form for more information on refinance bridging loans.
Contact Redrock by phone or by using our contact form letting us know how much you’d like to borrow and the security you’re offering.
We’ll be able to give you an indicative decision immediately on your proposal. In-principle lender decisions possible within 3 hours.
The lender selected will arrange for a surveyor to value your property. The lender receives the report within 3 days. Solicitors are instructed.
You will be able to draw down the funds required upon receipt of an acceptable valuer’s report and paperwork from your solicitor.
The project you’ve worked on has taken longer than expected and you’re not in a position to arrange a residential or commercial buy-to-let mortgage
The project you’re working on has taken longer than anticipated and the property is not ready to take to market yet
You have completed a project but not found a buyer within the time envisioned
You are unable to repay any lending facility you have in place in full and you need to arrange bridging finance to fund the extended gap
Loan to value (LTV): 75%
100% funding is available providing you have additional security with sufficient equity
Loan amount: £26,000+
Loan term: 3 to 24 months
Interest rates from: 0.55%
Interest options: serviced, retained, rolled-up
Exit strategy: sale or refinance*
Decision: 24 hours
Completion: 10-14 days
Loans available in UK and Europe
Adverse credit considered
Available on first and second charges
…your construction, refurbishment, or development project has taken longer than expected to complete
…your building project is complete but you’ve not had time to arrange standard longer-term secured funding
…it is not possible to repay existing borrowing due to expire shortly just yet using your desired exit
You may wish to find another bridging loan or form of finance offering more competitive interest rates than the current package you have
Unexpected additional costs have occurred during the construction phase meaning that you need more money to complete your project
What is bridge financing? Bridging finance provides borrowers with the finance they require to fund a gap between two different events or stages in a process.
For example, many borrowers use auction finance, a type of bridging loan, to purchase property at auction. Borrowers use their bridging loan to pay the deposit they need to secure the property at the fall of the hammer and then to make full payment of the purchase price minus deposit within 28 days.
Once the process is complete, a borrower may then apply for a mortgage to either live in the property or rent it out to other. Proceeds from the mortgage then pay off the bridging loan in full.
In this case, the bridging loan has been used to fund the gap between buying a property and arranging a mortgage on it.
Like a mortgage, a bridge loan is secured on property – in the case of auction finance, it’s secured using a first charge against the property purchased at the auction.
With a mortgage, you have up to 35 years to pay for the property you’ve bought. Unlike a mortgage, bridging finance is short-term – you must repay the bridging finance back within 24 months (or 12 months on a regulated bridging loan where you intend to live in the property you’ve purchased).
With a mortgage, you make monthly repayments to your lender but, with a bridging loan, you repay the loan in full on or before the expiry date of the loan. There are no monthly repayments at all.
How do you pay a bridging loan back? With an exit strategy you agree with your lender in advance – we cover those below.
You may have applied for your original loan to help you buy residential property which you intend to live in, rent out, or sell on to another person.
It may be the case that the refurbishment or renovation work you’ve undertaken on a property has taken longer than expected or cost you more than you budgeted for.
These delays or additional costs may have pushed back progress on your project meaning that you’re unable to sell the property on or that you’re unable to arrange a mortgage on it by the expiry date of your original bridging loan.
As a result, you’re at risk of defaulting on the loan and your bridging loan provider may take steps to repossess the property.
With a refinance bridging loan, you’ll be able to pay back some or all of the original facility and, because you can take out a refinance bridging loan for up to 2 years, buy yourself extra time to complete the project.
Please note that if your original bridging loan paid for a property which you and your family intend to live in, legally there would have been a maximum duration of 12 months on the loan you took out.
Any residential refinancing bridging loan would also, like your original loan, be regulated and you’ll be required to pay back the outstanding balance to your new lender within 12 months.
You may have taken out your original bridging loan to purchase commercial or mixed-use property or land with the intention of:
What if there have been delays or cost overruns in your project meaning that you’ll be unable to use your intended exit strategy to repay your original bridging loan on or before the due date?
A commercial refinancing bridging loan will give you the extra time you need to finish any work remaining (and, on occasion, raise extra funds for the project).
You may have originally used a bridging loan to borrow money against the equity in residential, mixed-use, or commercial property or land that you already own because you needed to raise funds quickly.
On these types of bridging loan, the lender will take a second charge on the equity you’ve pledged as security. Where there are no outstanding mortgages or loans on the property you offer, the lender will take a first charge.
Many borrowers using bridging loans in this way use the facility for a variety of reasons including but not limited the repayment of debts to HMRC or to other creditors, to stop bankruptcy or repossession proceedings, or to raise working capital for the business.
In many cases, borrowers’ intended exit strategies might be the arrival of funds from the payment of invoices, monies received from a will (or money raised from the sale of assets bequeathed in a will), the maturing of an insurance policy, and so on.
If you are unlikely to receive the money you’re expecting in time, you may wish to consider applying for a refinance bridging loan so that you can repay your original facility in full by the due date.
Redrock Commercial Finance is a whole of market bridging loan and development finance brokers. The company was formed in 2011 and our team have a combined 60 years’ experience in arranging for our borrowers bridging loan and development finance packages at the most competitive interest rates and on the most favourable terms.
Many lenders are reluctant to refinance existing bridging loans. Of those which do, there is also a reluctance among some to provide funding to the value of the original bridging loan that you wish to pay off. This is particularly the case with larger development projects.
We have a close working relationship with the underwriting teams at each of our lenders. We will only propose your deal to the lenders we know are likely to view your application favourably. When packaging and presenting your request to the underwriters for a final answer, we address the concerns lenders are likely to have before giving their approval.
For this type of loan, a much stronger business case has to be made and, thanks to our experience in the sector and the years of trust built up between Redrock and the lenders on our panel, we are absolutely confident we will find you a suitable bridging loan in the shortest time possible.
The cost of a bridging loan depends primarily on the bridging loan interest rate charged on your facility. The rate you pay will be determined by a number of different factors including the amount of money you’re requesting, the value of the property you pledge for security (and the remaining equity in it), and how likely your lender believes it is that you will be able to exit the loan in the way you intend.
For an indicative estimate of the likely monthly and overall interest you’re likely to pay, click for our refinance bridging loan calculator.
For a quote on the best bridging loan for your project, call us on 020 3780 7610 or click here for our contact form.