Re-Bridging Loans

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Home » Bridging Loans » Types of Bridging Loan » Re-Bridging Loans

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What is a Re-Bridging Loan?

Re-bridging loans are used to refinance an existing bridging loan if you are looking for a better interest rate, or your existing loan is coming to the end of its term.

Customers generally approach us for a re-bridging loan to either see if we can save them money by moving the loan to a lender with lower rates. Or, alternatively, if their current bridging loan is nearing the end of its term but the requirement for this type of finance is still there.

Read on below to find out more.

Criteria

Below are the main criteria points to consider when taking out a re-bridging loan.

1Up to 75% Loan to Value (or 100% with additional security).
2Property in a poor state of repair considered.
3Rates from 0.44% per month.
4Loans from £25,000 with no maximum loan size.
5Borrow from 1 month up to 24 months.
6Any security considered.
7Interest can be rolled into the loan.
8Loans with no early repayment charges available.
9We will consider any exit route.
10Refurbishment or conversion accepted.
11Adverse credit accepted.
12Loans available throughout the UK.

How Much Can I Borrow?

We are able to fund Re-bridging loans up to 75% loan to value (LTV), and can even lend up to 100% LTV with additional security. Funding starts from £25,000 with no maximum loan size.

How Much Will It Cost?

Depending on why the existing bridging loan needs re-bridging, there will be an impact on interest rate. If it is wanted to save costs, a fairly low rate could be achieved. Whereas, if the existing loan has come to the end of the term because the property hasn’t sold, the LTV could be restricted and a higher interest rate charged.

We can offer loans from 0.44% per month up to 55% LTV and can even lend at 0.64% per month at 75% LTV.

In addition to the monthly interest cost, lenders charge a lender arrangement fee – a fee for setting up the loan. This fee is usually 2% of the loan amount, although this is sometimes discounted as low as 1%, especially on larger loans.

How Long Do They Take To Complete?

They can be completed in around 5 – 14 days if the property valuation and legal work is done quickly. If there is a deadline for completion you should tell us upfront so we can work to this timescale.

If you’re keen to secure the lowest rates, it might be worth allowing slightly longer for completion as the lender may want to undertake some additional checks.

How Are Re-bridging Loans Assessed?

Applications may come under more scrutiny than standard bridging applications as the lender will want to make sure that they are actually solving the root problem.

As your exit strategy on your current loan has failed, they will want to ensure that the problem is not going to happen again. By offering a bridging loan to an applicant, only for it to fail again, they will only be delaying the problem, making it worse in the process.

As such, detail around the planned exit strategy for your existing loan, will be the main issue when the initial assessments take place.

Assuming the exit is considered solid, then the application will proceed in much the same way as a standard application.

The other key considerations for the lender will be:

  • The security property
  • Your credit history (for some lenders)
  • The loan to value requested

Will I Have to Pay High Rates?

Although the application will be seen as higher risk by the lender, the rates charged won’t necessarily be higher than your current loan.

Re-bridging applications are assessed on a case by case basis, so the rate charged will depend on the reason that the first exit strategy failed.

Where the issue is unlikely to be repeated, you will usually find that the rate charged will be lower.

What Exit Will Be Acceptable to The Lender?

This is key to the success of your application. The strongest exit strategies are refinance to a term loan or sale of the property.

Where you’re planning to refinance to a term loan (mortgage), the lender will want to see evidence that this is possible. Usually an agreement in principle from your new lender, with confirmation that you will be able to meet their criteria will be acceptable.

Where sale of the property is planned, the surveyor will confirm the likely marketing period for the property. This will be very important as the lender will want to ensure that a sale can be completed before the term of the new expires.

about-the-author-gary-hemming

About The Author

This content was produced by our Commercial Lending Director, Gary Hemming. Gary has over 15 years’ experience in financial services and specialises in bridging loans, commercial mortgages, development finance and business loans. He is widely respected in his field and regularly provides expert commentary for specialist trade publications, specialist business press as well as local and national press.

Gary Hemming CeMAP CeFA CeRGI CSP  -  
Commercial Lending Director

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