What are the challenges of re-bridging?

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There has been a lot of discussion in the industry recently surrounding the emerging trend and increasing volume of business within the ‘re-bridging’ loans sector. This is essentially where a borrower has taken out a bridging loan and for whatever reason needs to take out another one to replace it.

Despite being something we have assisted clients with for some time now, re-bridging has become a heightened topic of conversation in recent months, generally due to many lenders’ refusal to provide borrowers with an extension when requested. Be it because of their lending policy or due to the conditions of funding lines, some lenders are simply unable to renew or extend a loan.

When would you consider a re-bridge?

Similar to a residential remortgage, there are many reasons why you may need to refinance your existing loan or alter its terms. Whether this is because ‘Plan A’ has failed, the borrower has under-estimated the time required to secure further finance, or has experienced planning consent issues or a sale falling through – this is something we have helped numerous clients with in the past. We also regularly see borrowers looking to re-bridge simply because the term of their original loan was not realistic in the first place or suitable for their needs.

Why is re-bridging topical in the current market?

Post-Brexit, we have witnessed many more lenders having their funding lines stopped or suspended, making it impossible to supply the funds to offer a re-bridge even if they were willing to. Because of this, Brexit has proven a contributing factor to the increasing volumes of borrowers looking to re-bridge, while the post-Brexit economy has also seen valuers being very cautious, leaving clients with the need for much higher gearing than before.

Some lenders already have a policy of not providing a re-bridge, due to the perception that they are essentially taking on another lender’s issue. However, there are many specialist lenders that we have connections with who are happy to accommodate a re-bridge for the right client.

Is it a sensible option for me?

This can still be a challenge, with restricted availability and the requirement for lower valuations and higher loan to values, so it’s important to engage with an expert broker to help you navigate the market. However, it is still a very viable option when approached in the right way, as lenders will largely base their decision on what has happened and how you plan to repay the loan.

Ultimately, mortgage brokers have a duty of care to the client and lender, to ensure there is always a viable exit route to avoid the prospect of another re-bridge. This is exactly where we can help. We will help you secure the best option possible and ensure your financial security, while putting together a structured plan and repayment strategy to meet your financial needs.

If this is something you are interested in or you simply wish for more information, please do not hesitate to get in touch.