How Re-Bridging Finance Can Rescue Your Development Project

Re-bridging finance is a financial solution designed to help developers who are approaching the end of their original bridging loan term but haven’t yet achieved their exit strategy, such as selling the property or securing long-term finance. Re-bridging provides developers with an opportunity to refinance their current bridging loan and avoid hefty default penalties or delays that could significantly impact their project.

What is Re-Bridging Finance?

Re-bridging finance is essentially a new short-term loan that pays off an existing bridging loan. This new loan extends the timeline and allows developers more flexibility to complete their project or finalise their exit strategy without defaulting on the original loan.

Bridging loans are typically taken for a short period (3-12 months) and are often secured against property assets. However, if the project faces delays—whether due to construction issues, sales slowdowns, or refinancing obstacles—developers might not meet the loan repayment deadline. Without re-bridging finance, they could be subject to high interest rates, default penalties, or even risk losing the property.

Why Developers Might Need Re-Bridging Finance

Delays in property development can arise for several reasons, and each can create financial stress for developers:

• Delays in Selling the Property: A project might be completed on time, but finding a buyer can take longer than expected.

• Construction Overruns: Sometimes, unforeseen challenges in construction, such as bad weather or material shortages, can delay the project completion.

• Difficulty Securing Long-Term Finance: If a developer planned to refinance with a longer-term loan, market conditions or lender requirements might create delays in securing this finance.

In such scenarios, re-bridging finance acts as a lifeline, providing developers with the extra time they need without falling into default.

How Does Re-Bridging Finance Work?

Re-bridging finance works similarly to a standard bridging loan but is specifically designed to refinance an existing loan. Here’s how it typically works:

1. Assessment of Current Loan Situation: Lenders evaluate the status of the current bridging loan, the development progress, and the developer's exit strategy.

2. New Terms Negotiation: Based on the assessment, new terms are agreed upon, including loan-to-value (LTV) ratios, interest rates, and fees. These terms are often more flexible, allowing developers to adjust their strategy.

3. Loan Repayment Extension: The re-bridging loan is used to pay off the original loan, and developers gain extra time—often up to 12 months or more—to finalise their exit strategy, such as completing the sale or securing long-term financing.

4. Exit Strategy Execution: Once the new loan is in place, developers focus on executing their final exit strategy. This could be selling the property or moving to a more stable, long-term finance arrangement like a mortgage.

The Benefits of Re-Bridging Finance

• Avoid Default Penalties: If developers fail to repay their bridging loan on time, they may incur significant penalties. Re-bridging finance allows them to avoid these fees and keep their project on track.

• Additional Time for Completion: For projects experiencing delays, re-bridging finance provides the breathing room needed to finish construction or complete sales without rushing.

• Flexibility: Unlike traditional refinancing, re-bridging loans are more flexible and can be tailored to the specific needs of a project, whether it’s completing final works, arranging for the sale, or securing new long-term financing.

How LivFinance Can Help

At LivFinance, we understand the challenges developers face and offer tailored re-bridging finance solutions to ensure your project doesn’t stall. Our expert team works closely with developers to understand the project’s needs, arrange competitive re-bridging finance, and guide you through every step of the process.

• Tailored Solutions: We offer flexible loan terms to help meet the specific needs of your development.

• Fast Turnaround: LivFinance can arrange re-bridging loans quickly, ensuring you don’t face delays or costly penalties.

• Industry Expertise: Our experienced professionals can guide you through refinancing options, ensuring you have the financial resources to complete your project successfully.

Key Takeaways

• Re-bridging finance is a valuable tool for developers facing delays or issues with their original bridging loan, offering extended time to complete or sell their property.

• It prevents costly default penalties and gives flexibility to manage unforeseen issues in development.

• LivFinance offers competitive re-bridging solutions to ensure developers can navigate these financial challenges smoothly and effectively.

Whether you're nearing the end of your original loan or need extra time to complete your development, LivFinance is here to help you with bespoke re-bridging finance solutions. Contact us today to discuss your project and financing needs.