Bridging loans are an extremely valuable financial tool for individuals and businesses requiring short-term funding. But what happens when your bridging loan term is nearing its end or certain circumstances prevent repayment?
Extending a bridging loan can offer a flexible solution, but it’s important to understand the process, what counts as a valid reason, and the potential risks involved.
Can I Refinance An Existing Bridging Loan?
In short, yes. You can refinance an existing bridging loan with a process known as re-bridging.
If your current bridge loan is nearing its end and repayment isn’t possible, refinancing a bridging loan can give you the breathing room you need. To do this, you will need to secure a new bridging loan agreement to repay the first bridging loan. This agreement will most likely come with revised terms that align with your current circumstances.
At Pyxis Capital, our brokers specialise in helping clients navigate these situations. Whether you want to re-bridge a bridging loan or explore a tailored exit strategy, our team can offer a smooth transition without unnecessary stress.
Learn more about bridging loans.
Why Do People Extend Their Existing Bridging Loans?
There are several reasons why borrowers might want to extend their bridging loans. Here are just a few of the main reasons we see:
1. Delays in property sales: If a property sale needed to repay the loan is delayed, a bridging loan extension can provide additional time.
2. Refinancing delays: Securing long-term financing, like a mortgage, might take longer than expected.
3. Project overruns: Property development projects can run into unexpected delays, increasing the time needed to complete them and sell, or refinance the property.
4. Market conditions: Market conditions can affect property values and demand, requiring more time to achieve a worthwhile sale.
Extending a bridging loan in these situations means the borrower can meet the terms of their loan agreement, avoiding penalties and maintaining their credit score.
Can You Be Refused To Extend A Bridging Loan?
Yes, lenders can refuse to extend a bridging loan for the following reasons:
• Insufficient security: If the value of the property or asset secured against the loan has declined, the lender may be unwilling to extend.
• Poor repayment strategy: Without a clear plan to repay the loan, the lender may see the extension as too risky. Learn more about refinancing and exit strategies.
• Changes in borrower circumstances: A decline in the borrower’s financial position or credit score could lead to a refusal.
• Lender policies: Some lenders may have strict policies or limits on bridging loan terms and may not offer extensions.
How To Extend A Bridging Loan
At Pyxis Capital, we help clients navigate the bridging loan extension processes. If you’d like to extend your bridging loan, you can start by taking the following steps:
1. Contact your bridging loan lender as soon as possible: When you feel like you may need an extension, inform your lender as soon as possible. Pre-emptive communication will demonstrate responsibility and may increase your chances of approval.
2. Provide updated financial information: Be prepared to share details about your repayment strategy, financial situation, and any delays that have led to your bridging loan extension request.
3. Negotiate the terms: If necessary, discuss the revised terms, including interest rates, fees, and the new repayment timeline.
4. Consider refinancing: If your lender declines your bridging loan extension request, refinancing a bridging loan with a new lender may be the best option.
What Happens If You Go Over Your Bridging Loan Term?
Going over your bridging loan term without arranging an extension or exit strategy can have serious consequences, including penalty charges, harm to your credit score (affecting future borrowing opportunities), and risk of repossession from the lender to recover their funds.
What To Do If You Go Over Your Loan Term
If you’ve exceeded your loan term, you should always act quickly to ease the situation. We know this is a stressful time, but proactively addressing the issue can help you avoid the worst-case scenarios and find a viable solution.
1. Contact your lender immediately. Explain your circumstances and request a short-term extension.
2. Explore refinancing options: Re-bridge your bridging loan by securing a new loan with another lender.
3. Seek professional advice: Get in touch with the experienced brokers on our team. We can assess your options and negotiate with lenders on your behalf.
Ready To Extend Or Refinance Your Bridging Loan?
At Pyxis Capital, we understand that life doesn’t always go to plan. From day one, we focus on understanding your needs and crafting tailored solutions, including robust exit strategies for peace of mind.
Obtain your no-obligation quote today for the best possible solution.