What is Bridging Finance?

Bridging finance is a short-term loan secured against real estate or other assets. Typically it is arranged very quickly to solve a problem or to provide funds for an opportunity.

While usually more expensive than a traditional mortgage, bridging finance can be arranged much quicker than other types of financing. It also involves less paperwork and scrutiny than a mortgage.

Bridging finance can be arranged against any type of real estate asset. Therefore, this type of financing can be used for almost any purpose, and it is very flexible in how it is structured.

What Does Tenn Capital Look At When We Assess An Application?

The Security

The security is the asset or real estate that the bridging loan is secured against, and what would then be repossessed if the loan was not paid back as agreed. Technically, any asset can be used as security, and we do consider assets that aren’t real estate. Typically, however, bridging finance transactions use a residential or commercial property as security.

The Borrower

The person borrowing the money is a key factor of any application. Whilst their income or assets may not be relevant to the application, the “quality” of the borrower in terms of standing, background or experience goes a long way in determining whether a loan is granted.

The Purpose

The reason a bridging loan is required is a vital piece of information. We will also look at the circumstances that make bridging finance a necessity, how speculative the transaction is or how many moving parts there are.

The Exit

How the loan will be paid back. One of the most important parts of any bridging loan application is how the borrower plans to exit the loan, how certain or advanced this exit is, and what can go wrong. These elements are of central importance to the deal.

ARRANGE A CALL

tenn website faq 01

tenn website faq 01

How Does Tenn Capital Underwrite Bridging Finance Applications?

First, we want to understand the scenario, the asset, the plan and the exit. This information is presented to us isn’t relevant as long as it’s clear, organised and transparent.

With this information in hand, we will work through the transaction with our credit team, do our research and background checks. Of course, we will do this thoroughly, but we will complete it as fast as possible.

If we don’t think we can help, we will clearly tell you and then explain why.

If we think we can help, we will offer non-binding but credit backed heads of terms. We will clearly explain our lending rate, loan to value, term, fees and other pertinent information. This will be valid for a short period of time.

If the terms are acceptable, we will engage lawyers, valuers and other required parties to start their process.

We will then also ask the borrower for supporting documentation and other paperwork vital to the application – this will be the minimum required, and we will not request anything superfluous.

Once everything is returned and complete and the file is ready, we will pass it back through credit. If everything stacks up, we will offer the final, binding mortgage offer.

If there are problems at this stage, we will work with you to find solutions if there are any – this may then result in a change to our terms – if that’s the case, we will be clear with our reasoning and then work to move forward.

We will give borrowers as much confidence in our commitment to funding your plan through feedback, communication, and progress throughout this process.

What Are Tenn Capital’s Lending Rates?

We offer lending as a service, not as a product. So whilst the interest rate is often the most interesting factor of any loan, it’s not always the most important.

We can bring certainty, speed of execution, gearing, and solutions to the table, all of which will outrank price in terms of importance for the right transaction.

We will work with the borrower and their advisers to solve the funding gap, and the interest, rates and fees will be directly commensurate with the complexity of the loan, and we will be transparent with our workings.

What does that mean?

It means that we will look at every transaction individually, understand the risks and the requirements and put forward a fair price for the funds needed.

tenn website faq 02

tenn website faq 02

What Is An Exit Strategy?

An “exit strategy” is one of the most important parts of any bridging loan application. It refers to how the bridging loan will eventually be repaid. Our lending philosophy is described as a “bridging to a liquidity event.”

Typical routes of repayment are: 

  • Sale of the property
  • Refinance of the loan
  • Sale of another property
  • Sale of a business
  • Sale of stocks
  • Inheritance/divorce or other life events
  • Other value extraction

Tenn Capital’s team will look closely at the exit strategy and stress test the plan. We have years of experience and unique insights into the property market, financing and borrowers, and we will go beyond normal conventions to assist clients in this area.

All that we ask is that borrowers are clear and transparent and work with us to develop a viable plan. We are comfortable with speculative, unusual and complex situations. The more we understand, the better the outcome and transparency are key.

Lending money is easy. Getting it back is hard – we want to make sure you repay the loan within the agreed timeframe.

The Bridging Finance Market

Bridging finance originated as a relatively simple solution only used in one scenario. Homeowners that wanted to buy a new property before their home had sold could take out bridging loans. Lenders would release capital secured against one property, allowing individuals to buy another home before their first property had sold. The loan was paid back to the lender when the initial property was sold.

Today, bridging finance can be used in many more scenarios. Especially popular in the UK, bridging loans are known for being particularly flexible and quick to arrange. It allows property owners to raise capital that they can use to seek new opportunities, buy property, refinance, renovate and more.

London is one of the most fluid property markets in the world. However, with property prices rising, real estate can take longer to sell: especially at the top end of the market and in ultra-prime areas. As a result, individuals can be short on capital that’s effectively tied up in their property which hinders them from achieving their goals.

A lender like Tenn Capital will use the property as security in exchange for offering capital that can be used for various reasons.

Bridging Finance FAQ’s

How fast can a bridging loan be arranged? 

In our experience, it’s not how quickly a loan can be completed, which is important. Instead, the most important factor in a bridging loan is usually how quickly the borrower is confident that the funding will be available.

Tenn Capital are fast. We are fast to underwrite, decide to lend, make offers and complete transactions if that’s required.

Which types of bridging finance do we offer?

We don’t have a type, and Tenn Capital doesn’t have defined sectors we specialise in. We are not a mainstream bridging finance lender, and we are not here for straightforward transactions – there are other fantastic lenders for that.

Tenn Capital offer solutions for complex, high-value or international bridging finance requirements where the solution needs thought, ideas and solutions.

What are the important features of a bridging loan? 

Who is the borrower?  

What is the security?  

What is the reason for the loan?  

How will the loan be repaid?  

How long will the loan be required? 

Are the fees clear and transparent? 

Yes. Our fees are detailed clearly on our offer letter and are set out in % and £ terms. In addition, we give you an estimate of professional fees that will also be incurred during the process, such as legal or valuation fees. We do not want you to have any surprises through the process.

Will you need legal representation?

Yes, you select a lawyer to act on your behalf and to provide Independent Legal Advice. Tenn Capital writes that this is a condition of any loan to ensure that your interests are protected.

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