May 28th, 2019. Tom Rowlands
A Bridge to Innovation: Finish and Exit Bridging Loans
An exit bridging loan is a loan which has an obvious exit; typically, due to the short-term nature of bridging finance, all borrowings need to have a suitable exit strategy. Bridging loans, though, vary from firm to firm, with each having their own standards of exit, unique spins on the boundaries of bridging loans and ways to get ahead of the pack.
Below, we list some examples of the newest takes on bridging finance: finish and exit bridging loans.
What is a Finish and Exit Bridging Loan?
The finish and exit bridging loan is used for finishing up projects before exit, which is usually the sale of said development. Ordinarily, the product is an option for developments that have hit a snag and become delayed. These projects tend to be running out of time with their existing development finance, so need a little help.
The finish and exit bridge is useful for developers who don’t qualify for traditional exit bridge schemes. The following development scenarios are suitable for this product:
• The project hasn’t reached a point of completion for a traditional exit or buy-to-let facility.
• Cases where there is no build facility remaining in the existing development loan.
Examples of Finish and Exit Bridging Loans
Aspen Finance offers one such product, which can only be used for wind and watertight developments. This allows for reductions on revisit or building control sign-off and requires no building surveyor if the development is advanced, as underwriters will be present at the valuation stage.
Available throughout England and Wales for both corporates and individuals, the product has an 80% LTV with rates starting at 0.49% per calendar month for 8-12 months. The product is capped at £4m for portfolios and £2m for single properties.
London-based Avamore Capital also offers a finish and exit bridge, although it’s more limited than Aspen’s product. Only available in South England and the Midlands, Avamore offers 67.5% max LTV with a minimum monthly interest of 7%. This product does offer a maximum of £10m, but due to this higher amount, it is only available for limited companies and incorporated partnerships.
What, then, are the motivations behind creating this product? Jack Coombes, director at Aspen, explained them as follows:
“The demand is strong given the current environment of slower sales where development lenders are often requiring redemption earlier than developers are able to deliver.
“This new product places control back in the hands of the developer, and because of the close relationship we operate with every customer, including the prerequisite site visit, we can utilise our underwriters’ expertise to drop many barriers to entry. Add our high LTVs and service excellence and the product is truly compelling.”
Are Finish and Exit Bridging Loans The Answer?
Here at Pure Commercial Finance, we have an experienced team of brokers who work with a network of leading commercial mortgage lenders to find the right deal for you.
We know which lenders suit your specific requirements, so do get in touch if finish and exit bridging loans could solve your problems.
Article By Tom Rowlands
May 28th, 2019
Tom joined Pure Property Finance in 2017 after a career as a Client Wealth Manager, where he spent just under 3 years advising on financial and tax planning. Tom specialises in bridging finance and property development funding, having completed deals ranging from a simple £30K property purchase through to £2m+ mixed-use developments.See more articles by Tom