Dispelling Common Misconceptions about Bridging Finance
Onate has been at the forefront of the Irish bridge lending market since its inception in early 2021. While many understand the variety of uses and benefits to this lending method, there are still some lingering misconceptions. When debunked, they reveal bridge lending to be a useful and efficient short-term finance option.
Here are the three most common misconceptions that we see at Onate:
1. Bridging finance is expensive
2. Bridge lending can only be used for the purchase of property
3. Bridging finance is no longer available
1. Bridging finance is expensive
Bridging finance is a bespoke offering that allows the borrower get from A to B, be that the purchase of a property (that will ultimately be refinanced), the funding of a debt settlement with a bank or investment fund, or the releasing of equity in a property already owned, to take advantage of a market opportunity.
What the borrower is ultimately paying for with bridging finance is speed, ease of execution and certainty. Onate has a proven track record in the market for completing loans quickly and assisting borrowers through the process in a clear and concise manner. There is nothing more expensive than a missed opportunity!
2. Bridge lending can only be used for the purchase of property
Property purchase is just one of the many uses of bridging finance.
Bridge finance can also be used for:
Releasing equity tied up in a property that the borrower already owns (either debt free or with a low level of debt attaching). Equity release can be used for numerous purposes, allow for quick access to funding and is an effective way for a property owner to unlock the value of their property without having to go through an expensive and prolonged sales process
Funding debt settlements with pillar banks or investment funds. Using bridging finance to settle legacy debt issues is extremely popular as it can be accessed quickly. Secondly, certainty of funding is paramount. In addition, the term of the bridging loan provides the borrower with a track record of loan repayments and the ability to invest in the property itself. Both are beneficial when the borrower goes to refinance with a pillar bank or other term loan providers.
3. Bridging finance is no longer available
Bridging finance has been a feature of the lending market for over 60 years. However, its popularity did wane after the financial crisis in 2008. As international banks exited the Irish market completely, others - including the pillar banks - pulled back from bridging finance as they felt it was no longer core to their business. It was seen as a specialist offering that they could not effectively offer through their ever-shrinking branch network. To this end, many borrowers don't consider bridging finance as an option.
This created an opportunity for lenders like Onate to capitalise on this gap in the market. At Onate, we support borrowers who need short-term property finance to acquire investment properties, release equity in properties they already own, or to fund that debt settlement agreement that they have spent months or even years negotiating.
Bridge lenders understand their customers, their needs and can provide solutions that work for them with an exit strategy that suits their needs.
To find out more about Onate’s lending process, call (01) 697 2588 or email hello@onate.com
