Before we look at regulated bridging finance in more detail, perhaps we should consider the standard regulated bridging loan definition. Regulated bridging finance is a short term loan secured by a charge over a residential property in which the client, family member or close person will be living in. These are seen more like personal loans as opposed to business loans. While all bridging finance companies will offer unregulated loans, only a small number operate in the regulated bridging finance market. Often seen as more challenging in terms of administration, the lack of competition in the regulated bridging finance market has to a certain extent impacted headline interest rates.
Are regulated bridging loans a good idea?
Regulated bridging loans can be used in various scenarios where perhaps you are waiting for funds from a property sale to complete the purchase of another property. There will also be scenarios where you’re looking to refurbish your existing home and then remortgage on the perceived higher market value. There is no one size fits all when it comes to regulated bridging finance and the perceived value of such finance must be considered against the potential returns it creates.
While many people have an aversion to debt, we fully appreciate this but if used correctly it can be an extremely powerful tool. The ability to mix and match a number of financing structures to accommodate short, medium and long-term requirements is an area in which we are experts.
Traditional criteria for regulated bridging finance arrangements
We work closely with high net worth clients who often have complex financial lives and assets spread across the world. While there is no one size fits all when it comes to regulated bridging finance, some of the more traditional criteria include:-
- Bridging finance tends to be of a relatively short term nature, anything from one month up to 12 months
- Interest rates tend to start at around 0.5% per month
- Loan to value ratios up to 70% are commonplace with up to 100% if additional security can be tendered
- Interest is often rolled up as opposed to paid off monthly
- Finance with no early repayment charges can be negotiated
- Any realistic exit route will be considered
As we touched on above, while the market for regulated bridging finance is not as competitive as the unregulated market, we have access to the leading lights of the sector. Over the years we have invested significant time, money and effort into reaching out into the regulated bridging finance market. This has paid dividends many times over for our clients and we are fully aware of the latest trends, the latest debt structures and able to help you create a realistic exit route.
Our focused approach pays off
One of the main drawbacks for regulated bridge financing, at least in the eyes of traditional lenders, is the often increased administrative burden. Here at Enness we have long-term experience in structuring the most efficient and most affordable regulated bridging finance deals. Our extremely strong relationship with the relatively small regulated bridging loan market means our reputation goes before us. We know the information the likes of private banks and traditional banks require for bridging finance, we know the questions they will ask and we will have all of the information to hand before we approach them. Much of the key to our success in this area is the ability to negotiate the best terms while reducing the aforementioned administrative burden which many traditional lenders fear.
While some mortgage brokers will attempt to classify personal property deals as “buy to let mortgages” this is not the case and we prefer to play it by the book. In the longer term this encourages goodwill with lenders and ensures that our customers stay on the right side of the law. So, if you are considering regulated bridging finance secured by your home please give us a call and we can talk you through the options. These are no obligation discussions giving you the chance to ask any questions you may have.