Where a borrower's exit strategy on a bridging loan does not go according to plan, re-bridging may be an option. But what exactly is re-bridging finance, and how does it work?
Similar to general refinancing, re-bridging involves the extension, renewal, or replacement of an existing bridging loan. If the agreed-upon term on a bridging loan is coming to an end and the borrower's exit strategy has fallen through, re-bridging offers a practical and affordable solution.
Most reputable bridging specialists are fairly flexible and will extend the term of a bridging loan if the borrower encounters repayment issues. However as elevated interest rates and default fees may apply, it can often be more cost-effective to re-bridge.
Likewise, if a lender refuses to extend a bridging loan beyond the agreed deadline, re-bridging may be essential. With re-bridging, you effectively take out a new bridging loan to pay off the expiring loan, to be repaid several months later as agreed with the lender.
If you are considering re-bridging for any reason, call bridgingfinance.com anytime for an obligation-free consultation. We will help you understand the options available and will do whatever it takes to provide you with a better deal than your current provider.
Bridging loans can be used for a variety of purposes, with the following being the most common:
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There are several reasons why a bridging loan customer may consider re-bridging:
In all instances, re-bridging at the right time could prove more cost-effective than allowing an existing bridging loan to expire.
The costs of re-bridging vary from one loan to the next, in accordance with the lender's policies and the terms and conditions of the loan agreement. For example, some lenders charge an arrangement fee of anything up to 2%, while others impose no initial fees at all. Likewise, early exit fees and penalties may be payable on some bridging loans where the borrower chooses to repay the balance early with a new loan.
However, re-bridging can often pave the way for preferable interest rates due to competition in the bridging finance market. Consulting with a broker before re-bridging is essential in order to assess the most cost-effective option and find the lender that best suits your needs.
Re-bridging can be approached in one of two ways:
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