Bridging finance is an incredibly flexible form of finance. You can use bridging loans secured against Portuguese property to buy real estate without a mortgage or create the liquidity you need to purchase real estate (in Portugal or abroad) before you have sold another property. You can also use bridging finance to release significant equity from a property you own in Portugal. Here, you can use bridging finance in various ways, including investing in diverse projects, buying assets, investing in stocks or securities, growing a business, consolidating debt, etc. As long as you have a viable plan and exit, there are lots of different ways you can use the equity released via bridging.
Portugal bridging loans are secured against real estate in Portugal. You can use commercial and residential property as security, but residential bridging tends to be the most prevalent. Bridging loans are always short-term: you can borrow for just a few weeks up to about 36 months.
Request a CallbackBridging finance is one of the most flexible forms of short-term finance available. It is traditionally used (particularly in the UK) to 'bridge the gap' between house sales - allowing you to borrow the capital needed to buy a new property before your old home has sold. Bridging finance can be used similarly in Portugal - giving you the ability to buy a new home before you have sold your current property. Increasingly, cross-border bridging finance is also available, where you can secure a bridging loan against a Portuguese property and use the loan to buy real estate abroad, or vice versa.
You can also use Portuguese bridging finance as an alternative to a domestic or international loan or to complete a property purchase quickly. In some cases, you may want to consider a bridging loan if you stand to lose a deposit on a Portuguese property if you cannot secure property finance or a mortgage by a specific date.
Many borrowers use Portuguese bridging loans to quickly close property transactions in the country, given that you can often draw down funds in as little as two weeks.
You can also use bridging loans to release equity from a property you own in Portugal. There are no defined requirements for using bridging: you can use equity to buy more property, buy assets, invest, grow a business, consolidate debt (in Portugal or abroad), raise liquidity for diverse projects and so on.
Bridging loans are prevalent in the UK. They are usually used to buy property before your old home has sold, purchase property without a mortgage, or raise liquidity that will allow you to achieve a specific goal. The mechanics of a Portuguese bridging loan aren't different from a domestic bridging loan in the UK. Essentially, a lender will simply offer you a short-term loan secured against property in Portugal.
While the basis of a Portuguese bridging loan is relatively simple, it's important to remember that local laws and regulations will still be applicable. This may affect how bridging finance works or how you can use it. It is imperative to understand how Portuguese laws may differ from those in your home country or country of residence and realise what the material effect of these will be (if there is any material difference at all). Your broker will be able to talk you through what you need to know based on your specific situation, but things to consider will include how real estate is bought and sold in Portugal, your fiscal position, potential liabilities and responsibilities, and the local legal system. Enness can connect you with the advisers you will need to work with to complete the deal if you are not already working with a team – this might include legal teams or tax experts, for example.
Enness offers 24/7 support for bridging loans – particularly in cases where you need to complete the transaction quickly. Your broker will act as a Centrepoint, keeping all parties involved in the deal moving at pace and ensuring everyone delivers what they say they will, when they say they will.
Bridging loans in Portugal can be secured against commercial or residential real estate, although residential bridging is more typical. It is always a short-term lending vehicle, lasting from just a few weeks to three years at maximum.
Whatever your motivation for pursuing this kind of finance and whatever you want to achieve, one of the essential elements of this type of loan is your exit strategy - in other words, how you will repay the loan. A clear strategy of how you will manage the funds is also vital.
It is worth noting that a Portuguese bridging loan will almost always be more expensive than a long-term mortgage or other types of conventional property finance. However, the cost reflects the very broad range of objectives you can achieve using this type of finance. The cost of a bridging loan will also reflect the expertise a lender needs to deliver a loan secured against international property – this is particularly relevant given there are very few domestic Portuguese lenders in the space.
Although these types of loans can be more expensive than conventional property finance, bridging loans are always competitively priced considering your intended use for the loan, the amount you wish to borrow, and the speed at which you can draw down funds. In many cases, the slightly more expensive cost of a bridging loan is more than offset by the opportunities it allows.
You can use Portugal bridging finance to:
Despite its prevalent use in the UK, bridging finance is a specialist lending product and won't always be the most beneficial option for you. Bridging loans are usually used to achieve a specific outcome or make something happen. It's not a financing product to use simply because it is available, not least because lenders will want to understand precisely why you want this type of loan and see a solid rationale for its use. Enness will always walk you through all your options and the alternative financing methods you could use as an alternative, so you can decide if a Portugal bridging loan is the right option for you.
Usually, you will use a Portugal bridging loan to achieve an outcome, although there are various ways this can transpire, and you can use them to meet your goals in a variety of ways.
If you want to buy Portuguese real estate quickly or want to finish a property transaction faster than you can secure a domestic or international mortgage, bridging can be a fantastic option. You can draw down bridging loans exceptionally quickly, meaning you can use this type of finance to buy a property before another home in your portfolio has sold, for example. You can either refinance at term or use the capital generated from another property sale to repay the loan.
You can also use Portuguese bridging loans to release equity (including high-value loans) against a property you own in Portugal. Here, lenders will be flexible concerning your plans and can consider releasing equity that will allow you to pursue projects and opportunities or deal with cash flow challenges you need capital to overcome. In this latter case, you will need to show your overall net worth, assets, and income support equity release or a loan, rather than choosing this type of finance as a last-ditch attempt to get out of financial trouble.
Ultimately, what you can borrow depends on various things. At the most basic level, lenders will want to understand the value of your Monaco property, how much you want to borrow, LTV and how you will use the loan. Your exit plan and how you manage the funds will also play a part. Some lenders offer around 60 or 65% LTV for a bridge loan secured against Portuguese property, but the LTV may be lower in some instances – if you want to borrow a significant amount or have very ambitious plans, for example. More broadly, your financial background, net worth and income can also affect how much you can borrow.
The lenders that offer bridging loans in Portugal are usually sophisticated players with niche expertise in international lending. As such, they can generally structure finance via corporate entities and various ownership structures if you or your adviser wish to do so for any reason.
You will also not need to be a full-time resident of Portugal to access this type of finance. Lenders that offer Portuguese bridging loans are used to working with non-resident property owners, and this will not inhibit your ability to lend as long as you have a viable case for borrowing. Whatever your nationality, country of residence and plans, Enness will negotiate the highest possible LTV and most competitive loan for you.
Bridging finance is prevalent in the UK but less so abroad and in Portugal, where it is a relatively niche area of expertise. There are domestic lenders, but they can sometimes struggle to cater to non-residents, foreign nationals and high-value loans – particularly after the financial crash of 2008.
In recent years, however, there has been an increased demand for international lenders to provide Portugal bridging loans. This has been driven, in part, by the significant number of UK nationals that own property in Portugal and wish to access bridging finance or equity release. Other foreign nationals and Golden Visa holders have also fuelled the demand, given many of these individuals are also attracted by the benefits of bridging loans – the speed, ease, and flexibility of this type of finance are particular draws.
Only specialist international bridging lenders can offer Portugal bridging finance. These lenders have a great deal of expertise working with sophisticated borrowers, high-net-worth individuals, non-resident property owners and various nationalities. Most of these lenders can offer bridging loans in deals that include international structures.
When it comes to a Portugal bridging loan, you will almost always need a tailored loan that Enness will negotiate to meet your specific scenario, including your net worth, property value, plans and how much you want to borrow. Whatever your scenario, Enness will approach the lenders that will offer you the most competitive bridging loan and who will be able to deliver your requirements regarding structuring, terms, loan size and LTV. Your broker will always work to maximise what you can borrow and negotiate the most affordable rates. Enness will also work with all the parties involved in the loan to ensure everyone is working towards the same goals and all players come together to complete the transaction as quickly as possible.
You can use a Portugal bridging loan in different ways. For example, you may want to buy Portuguese property quickly or without a mortgage or ensure you do not lose a deposit if you need to complete a transaction before you can secure a mortgage. Alternatively, you may wish to release equity from your property in Portugal.
You can use Portuguese bridging finance to achieve all these outcomes. Other advantages of bridging finance include:
Many borrowers want to explore the possibility of getting a Portuguese bridging loan because of how quickly you can draw down loans. Bridging lenders, including those that offer loans in Portugal, are built to move fast, and you can often draw down funds in as little as two weeks. Because of the speed with which lenders can deliver these loans, you may find using bridging finance is a much faster and more efficient way of arranging property finance than via an international mortgage, which will typically take much longer to arrange. Using Portuguese bridging loans to complete a transaction quickly if you face losing a deposit on a property in the country is also a popular way of using this type of finance.
Most international private banks require assets under management (AUM)as a requirement of a high-value Portuguese mortgage. How much AUM you need to place will depend on your financial situation, net worth and the amount you want to borrow, but it can be a significant amount. Many borrowers do not wish to place AUM for various reasons but have to do so to secure the mortgage they want. Bridging lenders do not require that you place AUM, which may be advantageous to you, especially if you do not want to start a new banking relationship or want to retain liquidity.
Bridging finance is a versatile financial vehicle; you can use these loans to realise various ambitions and solve problems, and they are often considered far more flexible than mortgages.
However you want to use bridging finance, and whatever you want to achieve, Enness will need to present lenders with your plan of action. In particular, you will need to know upfront what you will do with funds and how you will manage them. If you wish to release equity from a property or use the loan to finance cross-border projects (i.e., you will use loan capital outside Portugal), you will find these details are vital to lenders. Lenders are open to various scenarios, but you will need to have a defined, and feasible approach lenders can get behind.
Enness brokers bridging loans of all sizes. Substantial bridging loans are available, and Enness has a track record of brokering these. Loans of €1-€5 million (or more) are possible if your property's value and your financial background support lending these amounts. Loans of €10 million or more are also offered by niche lenders.
Any bridging loan with an international element will be comparatively more costly than a domestic UK bridging loan. Most lenders offering bridging loans in Portugal are international players (many are UK-based). Lenders take on more risk to execute international deals and need more technical skills to complete transactions. A Portuguese bridging loan will usually cost more than a mortgage because it requires more expertise to deliver.
Bridging loans are almost always more expensive than longer-term finance products like a conventional mortgage. While it can be easy to think that bridging finance is simply 'expensive', there is more to consider. Bridging finance is only ever used when you want to achieve a specific outcome or make something happen. You may need to access liquidity quickly (for various reasons), or you are faced with a scenario where you cannot – or do not want – a more conventional finance product like a mortgage – at least in the short term.
Rather than comparing the cost of bridging finance to the cost of conventional loans like a mortgage, it can be helpful to view the cost of a bridging loan through the lens of what it will help you achieve and the doors it will open for you. Bridging finance can solve problems and allow you to pursue opportunities that would otherwise be out of reach. Sometimes, it is the only financing mechanism you will have to reach a satisfactory outcome or make something happen. Understanding all your options and the cost of bridging finance is imperative. However, in many cases, its relative expense is well worth what it will cost you when you consider the price of losing an opportunity, being unable to solve a problem, or simply being unable to complete a property purchase quickly.
As well as the cost of the loan itself, bridging finance will also incur other fees, usually including legal costs, lender fees, valuations, arrangement fees and other liabilities. In some cases, you may also need to consult tax advisers and other experts, depending on your financial background and the complexity of the deal. Enness will walk you through all the fees you will incur if you take out a Portuguese bridging loan upfront, so you understand precisely what you will need to pay and what the whole finance package will cost to deliver.
Bridging finance is a type of secured loan. It's important to note that you may lose your property if you cannot keep up with repayments or you cannot repay the loan at term. Having a plan of how you will manage the loan and your ability to document your exit is imperative to ensure you present a solid case for lenders that will open the door to lending.
You can use a Portugal bridging loan to release equity from unencumbered real estate in Portugal.
Not all lenders offer equity release against Portuguese property, especially if you have a high-value home or residence. However, some lenders operate in the space and offer large loans. You can use equity release to create liquidity for any number of reasons to invest in securities or private stocks, purchase assets, acquire additional real estate in Portugal or abroad, consolidate debt or solve short-term cashflow issues. One of the benefits of this type of finance is that you are not obliged to deploy the loan capital in the country – you can secure the loan on Portuguese property and utilise the funds abroad.
When it comes to equity release, having a well-thought-out plan for managing the funds and exiting the loan is essential. Above all, your lender must be confident in your ability to manage the capital you borrow and pay back the loan successfully at term.
Bridging finance is a short-term financing mechanism; therefore, the repayment is different than with a product such as a mortgage. With long-term and conventional lending, you will pay back the capital (and often the interest) over time, but this is not the case with bridging loans, where the loan will effectively be due as a lump sum. Because you will need a significant amount of capital to settle your liability, lenders will want to understand precisely how you plan to do this.
There are plenty of options for paying back a bridging loan – this process is also called your exit. These will include:
Refinancing is one of the most common methods of repaying a Portugal bridge loan. Here, you refinance with another lender, and you will usually switch to a longer-term property finance package – this is typically a mortgage but could also be another finance product. In these cases, your new lender will pay off your bridging loan, and you will then repay your new loan via the terms set by your new lender. If you wish, Enness can arrange a refinance package while brokering your bridging loan, which can provide additional comfort to lenders.
You can also pay off a bridging loan by using the proceeds from a property sale. This can either be the property the loan is secured against or from disposing of another property in your portfolio, provided it covers the capital and any other applicable fees.
You can also plan to repay a Portuguese bridging loan by using capital from another source. Practically, this could come from any liquidity event, which could be the sale of other assets, sale of other property in your portfolio, the sale of a business, liquidating securities, receiving an inheritance or divorce settlement and so on. As long as you receive funds in a way that complies with local and international regulations, lenders are generally less focused on the liquidity event and more on other details. For example, they will want details of how certain you are the liquidity event will happen, when it will happen and what capital you will have available when you receive the funds.
The lenders that offer Portuguese bridging loans are usually international players. One benefit is that these lenders have a global outlook and can adapt to cross-border financing requirements. In many cases, you can secure a loan against a property in Portugal, and lenders will allow you to use the loan capital in another country – either in Europe or further afield. In essence, this means you can use Portuguese bridging finance to create liquidity for global projects or as a way to release equity in Portugal and use the loan abroad.
If you are planning to use the loan outside of Portugal, you may want to borrow in another currency, as it will be more practical to draw down the funds in a currency that is not euros. The lenders that offer Portugal bridge loans and equity release typically offer pounds sterling, Swiss francs or US dollars as standard and may be able to cater to other currencies.
Enness is a leading broker of Portuguese bridging finance. Get in touch to discuss your needs, and the team will talk you through your possibilities and give you more information about bridging finance tailored to your situation.
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