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Refinance bridging loans

Loan amount:

£100k - £30m

Rate from:

0.59%

Loan-to-value:

75%

Term length:

3 – 24 months

Calculator

Overview

Our loans for refinancing can provide the breathing space needed to arrange a new exit strategy, through traditional finance, the sale of another property, or to finish a project.

Key information

What is a bridging loan refinancing?

Refinancing a bridging loan is when a borrower takes out another loan to replace an existing finance facility. This can be with the same lender, or a different lender. Refinancing using another bridging loan is often referred to as a re-bridge and borrowers may need to do this for several reasons. Generally, a re-bridge is needed when a client’s exit strategy has fallen through. They apply for a new bridging loan so they can pay off their current lender. This provides enough breathing space to arrange a new exit strategy.

What's the difference between refinancing, re-bridging and a second charge bridging loan?

Refinancing:

Refinancing a bridging loan is when you reach the end of your term, and you’re looking to exit your short-term loan with a long-term financial solution, such as a mortgage.

Re-bridging:

Re-bridging is like refinancing except, instead of a long-term solutions, you use bridging to pay off the initial bridging loan. There are many reasons why you may do this:

  • To exit your current bridging loan for one with a cheaper rate
  • To cover the collapse of an exit strategy so you can plan a new one

This allows you to continue to utilise your bridging finance or cover the gap whilst waiting for your initial exit strategy to come into play, should it have faced delays.

Second charge bridging loan:

A second charge bridging loan is used when a borrower already has a first charge finance solution in place, such as a mortgage, but requires additional finance. A second charge names the lender as second priority in terms of repayment, upon the sale of the asset. This can put the second charge bridging lender at risk, meaning rates are often higher for second charge finance.

You may wish to secure a second charge, for example, to raise additional funds to renovate or convert a property or to put money into an existing or new business.

Why do people refinance their current loan?

People refinance their bridging loans for a number of reasons. In some circumstances, exit strategies fall through. Your buyer might pull out, inheritance might take longer to go through probate or mortgage delays might set you back. We look at the bigger picture and understand that extenuating circumstances do happen.

Refinancing allows you to switch to a lender. Whether it be for: cheaper rates, better service, or longer terms. Some people also re-bridge when they cannot extend their bridging loan, but still need time to utilise their short-term loan.

Can you extend a bridging loan?

With MFS, this is decided on a case-by-case basis at the discretion of our underwriting team. Being able to apply for a bridging loan extension will depend on a variety of factors:

1) Your lender

Some lenders will not allow an extension to a bridging loan, preferring instead to initiate extra charges or put the borrower into default.

2) The bridging product

Specific bridging loan products may have different term lengths, which may limit your opportunity to extend a bridging loan if it is already set for the longest term available.

What are the important things to consider before enquiring about a re-bridge loan?

When it comes to re-bridging or refinancing your existing bridging loan, there is one key factor to consider – your exit strategy. Lenders, like us here at MFS, will often want to know how you intend to exit your bridging loan when it comes to re-financing.

Can you only refinance once?

You can refinance more than once. A high majority of clients often refinance when they’re in need of additional funds. We can help you refinance more than once, whether you’re looking to raise additional funds to expand your business or start a renovation project.

In terms of re-bridging, you can only re-bridge a particular loan with a new lender once. Re-bridging is usually to repay a lender due to an exit strategy falling through or looking for a lender with better service or cheaper rates. A potential new lender may need to look into your current bridging loan to uncover why you need to re-bridge, to help prevent an exit strategy falling through. This provides protection for both you and the lender. You would then potentially be able to re-bridge with a new lender again in the future, but this would be another new facility.

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