Bridging Loans | Spain
Belgravia Property Finance have a few very unique funding options for short term Bridging loans in Spain. Mostly these options are restricted to first charge bridging loans against residential or commercial (other asset types can be considered) property in popular high end locations. Loan to values (LTV) are normally available for capital raising up to 60-65% of the property value, and up to 100% of build costs for refurbishment and development projects.
Rates and fees will be a key consideration when borrowing funds on a short term basis. Our partner firms offer bridging loans at competitive rates.
Belgravia Property Finance now offer bridging loans from 0.60%-0.90% per month, interest is normally rolled up within the loan, so that no monthly payments are required, but the option to pay monthly is available.
Admin fees are payable, for short term loans in Spain these are from €1,500 for locally domiciled borrowers or non standard asset types or where there is an overseas (i.e. BVI company) ownership structure involved, the fee may increase. The main costs to consider when taking a bridging loan in Spain are;
Funds can be made available at very short notice, 3-4 weeks is not an unrealistic completion time for straightforward applications, if speed is of the essence it is possible to complete a bridging loan in a matter of weeks. If a suitable valuation has already been carried out this will help speed up the process, as will instructing lawyers to complete due diligence as soon as possible.
Will I qualify for a Bridging Loan in Spain? It is not a difficult process to obtain a bridging loan, unlike a mortgage which is subject to affordability. Although as with a mortgage and most other forms of property finance, checks will be made on the borrower, this means SL companies will have a credit search carried out, as well as the majority shareholders of the company borrowing the funds, searches are normally carried out by Equifax Spain (www.equifax.es), to obtain a report you need to email your request to firstname.lastname@example.org along with a copy of your ID card or Passport.
Types of property deemed suitable for bridging loans in Spain;
Personal guarantees are a normal requirement for a loan if the borrower is a limited liability company ie. a Spanish SL company or company from an overseas jurisdiction ie. BVI company.
Bridging loans in Spain are available in Euros (€) or Pound Sterling (£). Careful consideration should be given to the currency of the loan, and the choice is normally down to the borrower.
Clearly if the bridging loan is being raised in Spain to fund a UK based project funded in Pound Sterling and this UK project will also be the eventual exit for the loan (the repayment strategy) then one would avoid the pitfalls of a sudden move in the wrong direction of the EUR/GBP exchange rate if borrowing was in Pound Sterling.
Some people may intentionally take a currency risk with the view that they will be on the right side of the trade, this can be a risky move, due to the short term nature of bridging loans.
If funds are being raised for a Euro purchase or project then normally funds would be borrowed in Euros, this is assuming the repayment strategy will also come from Euros.
Case Study 1
A client recently completed the build of a villa and required to refinance the loan that he borrowed to develop the property and also raise an additional amount to purchase a new development site. He intends to sell the property but knows this may take 6-12 months to achieve the best price. Belgravia Property finance arrange a facility secured as a first charge for a term of up to 18 months allowing enough time for the sale to go through. Client is a UK national living in Spain although non UK domiciled for tax purposes.
Case Study 2
A developer approached Belgravia to raise funds to against a commercial shopping complex in a busy tourist town. The property did have a small mortgage that was repaid when the bridging facility was drawn, allowing a 1st charge for the bridging lender. The funds raised were used to further expand the commercial building to provide a new street facing unit to rent to a long term tenant. The exit is the refinance of the whole building once works are complete to one of the largest Spanish banks. The security property was owned by a Spanish company (an SL company) and the owners were a couple, a UK national and Bulgarian national, both living and working in Marbella, Spain.
Case Study 3
A British couple based in the UK owned a luxury residential villa in Malaga, Spain. The property was used as a holiday let, but the couple had decided that they wanted to downsize this property and had already found the perfect apartment and put down a deposit. They needed funds very quickly in order to complete on their new apartment, once terms were issued and accepted within a day, the process of instructing valuations and the legal work started, completion took place within 4 weeks – this process can be quicker or slower case by case depending on how simple or complex the whole transaction is.
Annual bridging lending exceeds £4.7bn in 2017
Belgravia have multiple lenders on panel for development finance in Ireland, loans from €500K-€20m
Experienced developers only, 100% finance, no profit share to lender, only the interest rate.
Belgravia INV Ltd is authorised by the Financial Conduct Authority (FCA)
90% Equity funding available, London and Hotspots £1m+
Belgravia INV Ltd is a member of the Financial Intermediary & Broker Association (FIBA)
up to 90-100% of Project Costs available