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Bridging Finance Exit – mixed use pub with 6 flats – Case Study

The Client: 

The application was put through in joint names for two Foreign Nationals. Both clients resided in the UK on working visas.  

The Scenario: 

The applicants had previously purchased a mixed-use pub/residential property on a Bridging loan. They had refurbed it and brought it up to a high spec. Pubs are difficult to finance generally, and the flats above are broken up in to 3 x 1 beds and 3 x studios of which some are under 30sqm. The pub was leased and achieving regular rent, and the flats had been let to an agent with guaranteed rental scheme on a 2-year agreement.  

The Solution: 

Being a whole-of-market Broker, we had the knowledge that some lenders will consider pubs up to a certain loan to value, typically 60%. We also understand that some lenders will accept flats smaller than the usual 30sqm rule, and on top of that will allow 2 year leases on a guaranteed rent scheme. We covered the exit off the Bridging loan and raised some extra capital on top which allowed the client to reinvest.  

Contact us today to discuss Bridging Loans and how we can assist you.

Summary: 

It is possible to get lending on extremely complicated setups and situations that would seen as undesirable to most lenders.   

Key things to consider for Expat / Foreign national income: 

  • Some lenders will accept Foreign Nationals. 
  • Some lenders will consider pubs up to a certain loan to value. 
  • Some lenders will allow lending on flats smaller than 30 sqm. 
  • Some lenders will accept 2 year leases direct to management companies/agents on a guaranteed rent scheme. 

If you have any questions about Bridging Finance or Expat / Foreign National mortgages, or would just like a Free Quotation then please call us now on 03303 112 646 today. Alternatively please fill in our online enquiry form now and one of our Commercial Finance Brokers will call you back. 

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Auction Purchase via bridging loan – Case Study

The Client:

The client was self-employed and had a Buy to Let portfolio. Due to various factors including the Coronavirus pandemic, his income had fluctuated quite a lot over the past few years.

Scenario:

The client had purchased a property at auction and was under a very tight timescale to complete the funding necessary.

The property purchase was a leasehold property with a very short lease remaining which would require extending before or at completion making the timescales even tighter.

Contact us today to discuss Bridging Loans and how we can assist you.

The Solution:

We looked at the options for a standard buy to let purchase mortgage and provided details to the client, advising the client that it was unlikely complete within the necessary timescales. This would mean he would have been at risk of penalty charges or at worst, losing the property completely along with any deposit and fees already paid.

After many discussions the client opted for an option we secured for a bridging loan with one of our specialist lenders who are able to complete on the deal within a short timeframe. The plan would then be to remortgage away from the bridging loan to a conventional buy to let mortgage after the necessary 6 month period of ownership had elapsed.

Summary:

Even when the route of conventional mortgage does not seem viable, being a whole of market broker means we have the knowledge and tools to find suitable funding within tight timeframes for our clients.

Speak to us today to speak with one of our professionally qualified Bridging Finance Mortgage Advisors. Call us on 03303 112 646. Alternatively, please complete this short online form and one of our Advisors will call you right back.

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Bridge to Bridge Refinance – Case Study

The Client:

The client’s objective was to remortgage his Consumer Buy to Let property to repay the temporary Bridging Finance in place.  They had already taken an extension to repay the Bridge and were running out of time.  The bridging lender was threatening to take action to force sale of the property due to exceeding the term of the bridging finance, therefore client needed to move fast.

The Scenario:

On assessing the application, the bridging finance in place was a cross-charge over two properties, with most of the amount to be repaid secured against the client’s Consumer Buy to Let property.  The affordability of the remortgage was failing, so it was agreed with the bridging company that the client could repay the charge against the Consumer Buy to Let property for £455,000, which would leave the remaining funds as a charge against the client’s residential property.

Contact us today to discuss Bridging Loans and how we can assist you.

The Solution:

The remaining funds of the bridge remained as a charge against the client’s residential property under new bridging terms, allowing the client to take another 12-month bridge with the same bridging lender.  This reduced the risk of the bridging lender forcing a sale of their residential property.  

A remortgage for £671,000 was secured for the client against the Consumer Buy to Let property and the affordability was self-funding from the rental income. £455,000 was used to repay the bridge and the remaining funds to repay the existing mortgage balance.

The client’s income would have increased substantially by the time the bridge was due to be repaid on the residential property which helps the client to remortgage the residential property to repay the remaining balance of the bridge.

The customer was then able to keep both properties and force of sale was eliminated.

Summary:

Even when our clients feel they have no options available to them other then the resale of properties we can assist as a whole of market Broker and find solutions for some of the most complex cases.

Please get in touch today with our dedicated team of Specialist Mortgage Advisers for any Bridging Finance or Commercial Finance enquiries or questions you might have. Call us now on 03303 112 646. Alternatively, you can also fill in this short online form and we will get back to you straight away.

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Bridge to Let – Case Study

The Client:

The clients were new landlords who wanted to specialise in the Holiday Let market. They had a good background income and had highlighted key areas to invest in to begin the holiday let business. Their credit report was clean, and the plan was to build a portfolio of properties to become self-employed and focus on running the Holiday Let business.

The Scenario:

An opportunity arose to purchase a cottage style building in Oxfordshire in an area where there was a strong tourist demand. The client was aware that the property would need to undergo a full internal refurbishment and therefore needed flexible funding that allowed these works to be carried out. The plan would be to then refinance the property at the improved value where the Holiday Let rental could be used for mortgage affordability. The client had already been in touch with local holiday letting experts to ensure the potential yield would be suitable to fit in with their business plan.  

Contact us today to discuss Bridging Loans and how we can assist you.

The Solution:

Due to our experience with enquiries where property refurbishment is required, we knew a Bridging Loan would be the correct product to use. The client had advised that the works would take 3 months, therefore we were able to source an incredibly competitive bridging product for the client, which offered a 9 month term and no exit fees. 6 months interest were retained, and the final 3 months were serviced meaning that on day one, 6 months interest payments are deducted, or prepaid, then the clients’ income was strong enough for the lender to allow for months 7-9, they could cover the monthly payments. This allows the lender to provide a larger net loan in day one, rather than traditionally deducting all 9 months interest in advance.

Following completion of the works, we sourced a low 5 Year fixed interest rate for the client which provided them with a 75% Loan to value mortgage of the improved property value, with a lender that used a 32 week average of the low, middle and high season weekly Holiday Let rental estimates for affordability purposes. As the client had finished the works and refinanced within 5 months, the 6th month of interest that had already been prepaid was also taken off the redemption figure when refinance, providing the client with more of their initial funds back.

Summary:

Bridging Finance has many advantages ensuring you keep on top of your timeframes by providing flexibility to allow the works to complete and release funds from the property in a timely manner compared to a traditional Buy to Let Mortgage.  

Client can receive up to 85% LTV to give you the flexibility to carry out refurbishment projects, without having to put down a substantial deposit as well as completing with speed. 

Please get in touch today with our dedicated team of Specialist Mortgage Advisers for any Bridging Finance or Holiday Let enquiries or questions you might have. Call us now on 03303 112 646. Alternatively, you can also fill in this short online form and we will get back to you straight away.

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Semi-Commercial Remortgage off a Bridge – Case Study

The Client
Client is the owner of a Semi-Commercial Property with a Hair Salon on the ground floor along with a first floor flat. The client had obtained planning permission to build another 2-bed flat at the back, which they had recently completed using Bridging Finance as a short-term funding solution.

Following the pandemic, many Commercial Lenders withdrew from the commercial market due to uncertainties within the sector and lack of investor confidence.

The Scenario
Following the completion of the building works to add the rear flat, the client needed an exit off-the-bridge and wished to secure a new mortgage to pay off the Bridge whilst also having a long-term strategy with lower repayments. The Semi Commercial Property will now be generating rental income from the 2 flats as well as the additional rental income generated from the hairdressers.

Discover our Commercial Finance Broker services.

The Solution
Looking at the Semi-Commercial Mortgage option, we were able to illustrate to the Lender that the mortgage could be repaid using the rental income solely from the property. Although the client didn’t have substantial personal income, the Lender was confident with purely the rental income being generated from the security property.

Summary
A lot of lenders backed out of the Commercial and Semi-commercial mortgage market during the Covid pandemic; however, using our expertise and contacts have meant that we have been able to continue to offer these products to our clients constantly even during the pandemic. Commercial Lenders are again starting to embrace the strength of the market going forward and invariably will consider a sensible approach to repayment of their mortgage payments.

If you have any questions about Commercial and Semi-Commercial Mortgages or Bridging Finance and would like to receive a free quotation or advice, please call us on 03303 112 646 today. You can also fill in this short online form to get started and an Advisor from our Commercial Mortgage Team will get back to you straight away.

Discover our Bridging Finance Broker services.

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Bridge to Let – Case Study

The Client:
The clients are UK portfolio Landlords who already own multiple investment properties in Northeast England, as well as their own residential property and were in the process of purchasing a leasehold block of 8 flats on one title for £215,000 via their SPV Ltd Company. They are both self-employed, with the main applicant being a builder.

The Scenario:
The clients had sufficient funds from a recent buy, refurbish, refinance property, and planned to carry out minor works to the block to increase the value and rental yield. They had an existing mortgage application underway via another broker until the chosen lender decided to pull the application because of the level of personal borrowing the clients accrued whilst carrying out ongoing refurbishment projects after 6 months. Therefore, we knew they needed to act fast in order to avoid losing the property.

Contact us today to discuss Bridging Loans and how we can assist you.

The Solution:
Due to our experience with specialist property types such as multi-unit blocks of flats as well as being a whole-of-market Broker, we knew that there were lenders available that would be able to lend on the property with a satisfactory explanation as to why there is such high personal credit.

As the clients advised they were looking to carry out some works and required as high of a loan to value as possible, I recommended an 85% LTV bridging loan which would allow them to: purchase the property, carry out the works and have the security of knowing they could refinance onto a long term mortgage with the same lender once the works were complete.

As an existing borrower of this lender, they were able to obtain a 0.25% discount on the arrangement fee. After carrying out a 2 month refurbishment project on the property, at a cost of £22,000, are now in the final stages of securing their long term buy let mortgage with the same lender at 75% of the new £320,000 value

Summary:
When trying to purchase buy to let / investment properties via a Ltd Company, lenders will look at your personal borrowing, therefore you must be mindful that your broker has checked to see whether lenders have a background debt to income ratio for the Directors.

Bridging products are available up to 85% LTV to give you the flexibility to carry out refurbishment projects without having to put down as large of a deposit as well as completing with speed.

If you have any questions about Bridging Loans &/or want to receive a free quotation, please call 03303 112 646 today. You can also fill in this short online form to get started. Our team of Bridging Loan Experts will get back to you straight away.

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Regulated Bridge – Case Study

The Client:

A client was looking to purchase a property via auction which came with a strict completion deadline. As the client was a foreign national, sourcing a lender able to lend could have been a difficult process.

The Scenario:

As specialists in bridging as well as foreign national mortgages, we were able to find a lender who would consider the case within 24 hours. The value of the property was £200,000 with the client providing a deposit of £80,000.

Contact us today to discuss Bridging Loans and how we can assist you.

The Solution:

The first thing we did was to source a viable exit strategy for the client to ensure they would be able to clear-off the bridging loan – also known as “exit the bridge”. After referring the case to several suitable lenders, we provided the client with two competitive remortgage options. This provided the client with the peace of mind they required to meet the affordability criteria to be able to pay off the bridging loan and also meeting the main requirement for the bridging lender.

We then requested all packaging requirements in advance from the client to ensure that the lender was able to review the case as quickly as possible so that we could ensure the legal work could be carried out without any delays.

After meeting the completion deadline, we were than able to focus on the re-mortgaging of the property so the client could recoup the interest costs of the bridging loan, as well as having the security of knowing they have a long-term mortgage on the property. 

Summary:

If you have any questions about Bridging Loans &/or want to receive a free quotation, please call 03303 112 646 today. You can also fill in this short online form to get started. Our team of Bridging Loan Experts will get back to you straight away.

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Cross Charge Bridging Loan – Case Study

The Client

A client had an initial enquiry for bridging finance. The client was looking to purchase a commercial property for £150,000 and carry out £25,000 of works to convert it to the upstairs commercial area into residential accommodation under Permitted Development (PD) Rights.

At the time, the client had no cash to purchase the property, therefore needed to raise the funds elsewhere.

Contact us today to discuss Bridging Loans and how we can assist you.

The Solution

As the client had an unencumbered property worth £100,000, we sourced a lender who could provide a “Cross Charge Bridging Loan” across both properties at 75% LTV. This allowed the client to raise £75,000 against their existing property and provide a loan of £112,500 on the commercial property. The capital raising covered the initial £37,500 deposit for the commercial property purchase, and the remaining £37,500 covers the cost of works, legal fees and interest costs on the loan.

The rate secured for the bridging loan was 0.85% per month due to the commercial property involved, however as it was a cross charge application, it meant only one application was required and one set of legal fees for the lender to help reduce time and money.

As the clients intention is to remortgage the finished semi-commercial property, the benefit of the lender used is that the client can refinance both properties with the same lender onto individual mortgages with minimal legal work, reduced arrangement fees of 0.75% (standard 1.50%) and reduced re-inspection valuation fees to provide a seamless transition from the bridge.    

To know more and speak to one of our Bridging Finance Expertscall us now on 03303 112 646. You can also fill in this short online form to get started. Our team of Bridging Loan Experts will get back to you straight away.

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First time Bridging Loan – Heavy HMO Refurb – Case Study

The Client

We recently were successful in assisting a First time Landlord client in purchasing a standard 3 bed Victorian terrace. Their goal was to turn the property into 6 bed HMO by extending to the rear and converting the loft space.

The client only had enough funds to cover the initial deposit, stamp duty, fees, and the initial tranche for phase one of the works.

The Property

Since the property was to be heavily refurbished and developed, obtaining a traditional mortgage for such a property development is just not possible. Typically, lenders will only lend you the money to buy the property, meaning you wouldn’t be able to carry the conversation. Plus, with such significant works being carried out lenders would have major concerns about their security, probability of the works completing and future value.

Contact us today to discuss Bridging Loans and how we can assist you.

This is where a Bridging Loan works perfectly and really adds value.

Most Bridging Lenders can lend up to 70/75% net of fees to help buy the property, based on its current value, pre conversion. In addition to this, they can also lend a further sum of money to assist the completion of the major building works. Typically, a facility of up to 70% of the Gross Development Value is available.  (GDV = value of the property after the works have been complete).

In this clients’ particular scenario the property was purchased for £345,000. After the works were completed, the property was worth £650,000.

Note – 100% LTV for bridging finance is available if you have additional security in the background.

To add even more difficulties to the equation, the client had never completed such a development / refurb project before, nor had any building or landlord experience. Most bridging finance lenders would require you to have some exposure in this type of environment.

The Resolution

Despite the limitations, we were able to secure the client a competitive deal that enabled to them to complete the transaction and finish off all the works needed.

However, it doesn’t end there… Like any form of finance, bridging loans also need to be paid back, usually within 12 months.

Typically, there are two repayment strategies for bridging finance:

  • Sale of the asset, OR
  • Refinance the loan onto a traditional term mortgage

In this client’s scenario the exit plan was to refinance as they wanted to benefit from the rental income.

This posed another problem however, as the client was considered a first-time landlord, having never let a property before. On top this the tenancy was for an HMO and the property was to be owned/let via a Limited Company.

The majority of Buy to Let lenders will not lend to applicants looking to arrange a HMO having never had any Landlord experience before, as they consider this type of buy to let very specialist and high risk. However, this wasn’t an issue for us, we were able to source a competitive HMO Mortgage deal for the client enabling them to pay off the bridging loan within the loan term and achieve their HMO landlord dreams.

To know more and speak to one of our Bridging Finance Expertscall us now on 03303 112 646. You can also fill in this short online form to get started. Our team of Bridging Loan Experts will get back to you straight away.

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Bridging Finance for Residential Purchase Case Study

For this study we are looking at the benefits of bridging finance for a client looking to Purchase a new residential property by using a “Let to Buy” mortgage to raise funds for the deposit.

In this instance, the client was in the process of a standard Let to Buy re-mortgage (a let to buy re-mortgage is when a client wants to retain their existing residential property and let it out, max 75% loan to value) but due to their complex income the underwriters wanted to see more payments from their current contract which had just started.

The client was purchasing their new residential with a mortgage which had already offered and was now in a position where they would not be able to secure the finance, they needed using traditional means in time to meet the stamp duty deadline. This is where we were able to suggest regulated bridging finance to raise the deposit funds and be able to facilitate the purchase.

Contact us today to discuss Bridging Loans and how we can assist you.

With bridging finance there are a few important factors that need to be considered;

  • You must always have an exit for your client before taking out the bridge – the lender will need to know what this and will require proof if the exit is a refinance by way of a decision in principle.
  • Bridging finance is more expensive than a standard mortgage and should only ever be recommend as a short-term solution.
  • The financing options are either for Serviced or Retained. “Serviced” is where a client makes a monthly payment like a standard mortgage and the client’s income will then need to be evidence to show it is affordable. “Retained” is where the interest is deducted from the loan at the outset, usually with a minimum of 12 months deducted.
  • The client will have to pay valuation fees at the outset.
  • Arrangement fees and cost of the lender’s solicitors will also be deducted from the loan at the outset.
  • This will then give you a gross loan amount and a net release to the customer on completion.

With this customer, they already have the exit planned and just need to ‘Bridge’ the gap between the purchase and the let to buy refinance. Though 12 months interest will be deducted from the beginning, the client will only ever pay for the period they use, so if they refinance after 2 months, they will only pay for those 2 months of interest when they exit the bridge.

There is typically a minimum period of 1 month before the client can exit the bridge but normally no exit fees, standard arrangement fees are 2% of the gross loan.

The other uses for bridging finance are if a property is non-mortgageable and needs refurbishment, change of use, an auction purchase or if a client needs to raise funds quickly.

To know more and speak to one of our Bridging Finance Expertscall us now on 03303 112 646. You can also fill in this short online form to get started. Our team of Bridging Loan Experts will get back to you straight away.