Re-bridging an existing bridging loan

Re-bridging Facilities available

• New bridging loan to repay an existing facility
  
  
• Arrange an extension of an existing facility
  
  
• Repay existing bridging loan plus raise further funds
  
  
• For when an existing bridging loan is already overdue or in default
  
  
• For when Receivers have been called in and repossession is pending or has taken place

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:

1. Why have you gone over term, or why might you go over term?
   
   
2. What is your lender’s position about you going over term, what action are they going to take?

Why have or why are you going to go over term?

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:

1. The work has taken longer than planned and the property is still not in a mortgageable condition. However, it will be finished in a couple of months and then a mortgage can be put in place. An extra 4 months is therefore required to resolve the matter out.
   
   
2. There have been additional costs and the work can’t be finished within the original budget. You therefore need to raise additional funds to finish the work and then re-mortgage.
   
   
3. Circumstances have changed, and refinancing is no longer a possible option, meaning that you will need to look at a different exit option, for example sale. Therefore, the bridging loan needs to be extended or replaced for a new facility in order to allow time to achieve the best possible sale price.

What is your bridging lender’s position about you going over term?

How they behave will depend on:

1. Who the lender is 
   
   
2. What they have been told
   
   
3. If they have any concerns regarding the loan facility

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.

to

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.

What are your potential options

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.