We have extensive facilities available for individuals and businesses looking to replace an existing bridging loan with a new one.
Going over term on a bridging loan is potentially very serious – we are experts in advising of potential options and getting things put back on track.
If you are over term or worried that you may go over term on a bridging loan, there are two important things to consider in detail:
It is important to look at why you have, or potentially might go over your loan term. Something clearly has gone wrong or not according to plan.
Once you have identified the problem you need to look at how it can be fixed. If it can’t be fixed you will need to look at what other options are available to you for exiting the bridging loan.
The problem may be very minor, e.g. you will have funds available to repay the facility just a day or two over term. If so you just need to check how the lender is going to react to this.
Or the problem could be more serious, where things have not gone to plan with your project and you have no clear idea about how or when the loan is going to be repaid.
For example, a bridge loan could have been taken out to purchase and renovate a property that, due to its condition, was not suitable for mortgage purposes. The planned exit was to refinance the property once the work had been completed.
Possible problems with this scenario could be:
How they behave will depend on:
Your current lender’s position can range from:
Not being too worried - in which case they may leave your current facility in place, not increase your interest rate or charge any additional fees.
Charging a huge default penalty, the moment you go over term - They may even double the interest rate you are paying and instruct receivers.
Your current lender is likely to have kept in regular contact with you for updates about when they are going to be repaid. Therefore, you may already have an idea about how they will react if you go over term.
1. Remain with your existing lender
Typically, they may charge you an extension or rearrangement fee. These can be expensive and are often for a term much shorter than the original loan. Therefore, it won’t be long until you are in the same situation again.
2. Look for an alternative facility
You may be able to move your loan to an alternative facility that is much cheaper, whilst also offering a longer term, allowing you extra time to sort out any problems.
Last updated: 29 January 2020 | © KIS Bridging Loans 2020