Is it possible to refinance an existing bridging loan?

Is it possible to refinance an existing bridging loan?
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    Bridging loans are great financial solutions for when you’re short on time and need to quickly raise funds to purchase a property or complete a tricky development project. However, they are ‘short-term’ loans which are repaid much faster than traditional finance.

    If you have yet to repay your bridging loan and the repayment deadline is fast approaching, you may need to think of a new solution. You might consider refinancing an existing bridging loan.

    Refinancing involves replacing your current short-term bridging loan with a new one that, hopefully, offers more favourable terms. The new loan can offer extended terms, lower interest rates, or other benefits, providing financial flexibility in a property transaction or development project.

    At One, we are helping clients across the country access various short-term finance solutions for multiple reasons. With many years of experience in the field of bridging loans, we have the knowledge and connections needed to find the most suitable loans quickly.

    In this blog, we explore the possibility of refinancing an existing bridging loan, focusing on how and why you might decide to do it. Keep reading to learn more, or speak to an expert today to discuss your bridging needs.

    What can you do if you need to refinance a bridging loan?

    If you need a refinance bridging loan, whatever the reason, it is always a smart idea to look for a new loan with better terms so you benefit in multiple ways.

    Firstly, you should consider why you are choosing to refinance. Do you need more time to repay the existing loan? Are you looking for a better deal? Each reason will have its benefits and drawbacks, but once you know what your priorities are, you can then approach specific lenders who may be able to help.

    Bridging loan experts have access to a wide range of reliable brokers and lenders who can help you find the perfect refinancing solution for your needs. With their knowledge and experience, you will have more time and less stress, allowing you to focus on your property project.

    Finding a refinancing lender is one thing. You’ll also need to present a solid case by showcasing the property’s value and your ability to meet future repayments.

    Is refinancing bridging loans hard?

    Refinancing a bridging loan in the UK can be challenging, but it is achievable. Most of it comes down to your knowledge and the amount of support you have obtaining the new loan.

    Lenders will want to see that refinancing is a viable option for your property project. They will evaluate the property value, your creditworthiness, and your financial stability. Additionally, potential costs like exit fees and new loan charges must also be considered in the overall calculation.

    While refinance bridging loans are not inherently difficult, successful bridging loan refinancing still very often requires careful planning and a well-presented case to the lenders. With the right level of support, you’ll have the best chance of approval.

    Can you only refinance your bridging loan with the existing bridging lender?

    You may be able to refinance your bridging loan with your existing bridging finance lender. However, it is not the only option. You can explore other bridging loan refinancing options with different lenders. In fact, it might even pay to shop around.

    Researching new lenders and working with an experienced broker will allow you to compare terms, interest rates, and repayment plans, potentially finding a better deal. It’s advisable to consider various lenders to secure a bridge loan with the best terms that suit your financial circumstances.

    What does re-bridging mean?

    “Re-bridging” typically refers to the process of extending or refinancing an existing bridging loan. Re-bridging occurs when the initial bridging loan is approaching the end of its term or when there’s a need for additional time or capital.

    Instead of repaying the original finance, the borrower secures additional funds through a new refinance bridging loan or another form of financing. This strategy is employed to manage cash flow, address unforeseen challenges, or take advantage of new opportunities, especially in the context of property development or investment.

    Why would someone need to re-bridge?

    Re-bridging can assist property buyers and investors in many ways, from extending the repayment period to significantly improving savings. The need for a re-bridge will vary amongst individuals, but here are some of the most common uses:

    Additional time

    Refinancing bridging loans are often used in property transactions and investment projects to allow for more time and flexibility.

    When initially securing bridging finance, borrowers anticipate a short-term financing solution to acquire or improve a property. However, construction projects often encounter delays, unforeseen issues, unexpected costs, or changes in scope, requiring more time and capital than initially estimated.

    The re-bridging of loans allows you to extend the repayment period of the initial bridging loan or secure a new short-term loan to cover ongoing expenses. This can provide you with more breathing room, prevent financial strain and prevent potential defaults on the original bridge loan.

    Unforeseen circumstances

    Unforeseen circumstances are often tricky to manage as we don’t see them coming. They can involve construction delays, surpassing the budget for improvements, challenges in selling an existing property or unexpected changes to interest rates.

    Having the ability to refinance a bridging loan during times of uncertainty can provide you with peace of mind and keep your finances in good shape.

    Challenging property sales

    Bridging finance is often used to facilitate property transactions, assuming the sale will proceed as planned. In challenging property sales, or if a sale falls through, it can create challenges for the borrower with a bridging loan, as they rely on the funds from the sale to repay the loan.

    By exploring refinancing options with your existing lender or looking for a new re-bridge loan with a different lender, you can gain more time and flexibility to ensure a feasible exit strategy and fulfil your existing bridging loan commitments.

    Strategic refinancing

    Refinancing bridging loans can be prompted by changing market conditions or financing terms. If interest rates decrease or more favourable loan terms become available, it may be wise for you to refinance your existing bridging loan to take advantage of cost savings or improved financial terms.

    However, when looking to refinance existing bridge loans, it is essential to consider any additional costs involved, as they may outweigh the benefits. Strategic thinking can help you make better savings and stay financially secure in an uncertain market.

    How long does it take to re-bridge?

    If you are looking to re-bridge an existing short-term loan, then you will likely require a fast turnaround. While bridging finance is typically much quicker than traditional finance options, the speed at which a re-bridge can be completed varies depending on your financial situation, which lender you choose and the reason for the loan.

    For a swift approval process, it is essential to communicate effectively with lenders and have all documentation in order so they can easily assess your affordability. At One, we have a wide connection of reliable brokers who are experts in finding the most proactive lenders.

    Speak to One today

    At One, we are known for providing a personal service that helps clients access fast and affordable finance solutions across the UK. Whether you’re looking for bridging finance or development finance, our experienced leadership team have got you covered for both residential property and commercial property sectors.

    With a wealth of industry experience and a network of experts, we can support you throughout the finance and loan process, guiding you to the best deals available in the marketplace. We understand the complexity of finance and the need to do things often within a tight deadline.

    Contact us today for expert advice.

    Conclusion

    Refinancing a bridging loan is often just another part of property investment and tends to happen due to unforeseen circumstances or changes in plans. It can provide financial flexibility and a chance to optimise your investment, but it can also be worrying, especially when working with tight deadlines.

    By carefully assessing your financial situation, communicating with your lender and exploring your options, you can navigate the process much easier.

    Mark Piper
    Mark Piper

    Mark is the senior advisor at One Commercial Loans and has a wealth of experience in bridging and property finance.

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