Complex Credit History & Bridging Finance

Regular readers of this blog or Onate's LinkedIn page will be aware of the many advantages of bridging finance, such as speed and flexibility. Another advantage is our ability to evaluate proposals involving what some would term a ‘complex credit history’ or ‘legacy credit issues’. This is something that a traditional lender may not be willing to consider. Yet, in most cases, a complex credit history alone will not be a dealbreaker for Onate.

Legacy Credit Issues

The majority of legacy credit issues that we see in Onate date back to the 2008 global financial crisis. It’s aftermath included over-leveraged exposures that began to unravel as property prices plummeted and market rents reduced. This left many borrowers in negative equity and with unsustainable repayment schedules. These non-performing loans (NPLs) fell into arrears, and were sold off to investment funds at a discount.

Residential property prices and rents began to rise in Ireland from late 2013 onwards. Both have continued rising to date. The residential property market has gone from strength to strength since then but credit issues from 2008 or 2009 can still prohibit people from accessing much-needed credit now. This can be the case whether they’re looking to purchase residential properties as an investment in their future, or to refinance NPLs sold by their original lenders.

Debt Right-Sizing

At Onate, we support borrowers in exiting funds while retaining ownership of their assets. Our refinance allows for the debt to be right-sized to a sustainable level. It also allows the debt to be further refinanced by a longer-term debt provider in due course. This might be after carrying out refurbishments or re-tenanting the property. This value-add strategy might not have been something that the borrower was willing or able to do while with the investment fund.

The end result is that the loan is no longer in negative equity, and repayments are now sustainable. The borrower, armed with this bridging loan and a clean track record of repayments to Onate during the agreed term, is in a much better position. This loan can now be further refinanced by some of these previously-uninterested lenders over a longer-term. This allows the borrower to plan for the future and once again view their property as an investment rather than a liability. 

Our Approach

Proposals have many aspects, and addressing a legacy credit issue is only one element. Onate assesses proposals that traditional lenders struggle with. We do this by evaluating each proposal on its individual merits and on a holistic basis. As well as evaluating the borrower, we also take into consideration the property as asset-backed lenders.

At Onate, our team of experienced, specialist property lenders offer bespoke residential investment bridging loans of up to €2 million to property investors and entrepreneurs. We are fast and flexible, and we assess each case on its merits. All decisions are made in-house which means we can move quickly and with certainty. We have an appetite to lend across Ireland– from cities and large towns to small villages and rural locations.

If you have any further queries or to see how our lending process works, visit https://www.onate.com/blog/our-lending-process-and-how-it-works