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Case Profile
Our client wanted to buy an off-plan property for use when visiting London. We were approached by a representative of the client to see if we could arrange short term finance very quickly. The client wanted to complete an off-plan purchase at £2,675,000 where a 20% deposit had already been paid and contracts exchanged. The representative was already in the process of putting in place a long term mortgage, but this would not be ready in time. Without a short term solution – in this case, in the form of a large bridging loan – the client would lose the property and the deposit.
The main challenges were that the client was a Russian national living in Russia, and although a high net worth individual and a business owner, they had no provable income. The client also wanted to borrow £2,000,000 to minimize the deposit funds needing to be transferred from Russia, and needed to draw the funds and complete within 10 working days.
Solution
Using our knowledge and excellent contacts with niche lenders, we were able to find a solution for the client by sourcing a lender who would lend against the current value of the property (£2,900,000) rather than the lower off-plan purchase price. They were also flexible enough to offer a 6 month term with just the first 4 months interest rolled up, as this was the only way to achieve the desired net lend of £2,000,000. It was expected that the long term exit mortgage would be in place to fully repay the bridging loan within 4 months. However, if not, after 4 months the client agreed to service the interest from liquid assets held (which were evidenced). This resulted in securing a large bridging loan of 75% gross of the current property value.
In order to have the funds in place in time to meet the purchase deadline, we worked daily with the lender, and the client in Russia, to make sure that all due diligence was completed very swiftly. This included all parties being satisfied with the client, the source of funds and the exit route. The lender issued credit approved Heads of Terms in just 4 working days and all the legal requirements were met in time for the client to complete as planned. This saved the client’s deposit and avoided any late completion penalties from the developer.
In addition, despite the extremely limited options available to the client, we were able to negotiate a 50% reduction in the lender arrangement fee to 1% of the bridging loan amount, saving the client £21,750.
Deal Highlights
| Loan amount: | £2,000,000 net/ £2,175,000 gross |
| Rate: | 0.98% |
| LTV: | 75% |
| APR: | Overall cost for comparison 12.7% APR representative variable |
| Term: | 6 months |
| Type: | Bridging loan |
| Loan purpose: | Residential purchase |
| Lender’s arrangement fee: | 1% |
| Early repayment charges: | A minimum of 1 month's interest charged |
Notes
This case study is for information and illustration purposes only. It is not an offer, or suggestion of an offer. Each mortgage case is assessed on an individual basis and there is no guarantee that the solution described here can be repeated in the future.
Please note that this specific deal may not be available to – or suitable for – all customers, dependent on their individual circumstances. The rate quoted may become out of date at short notice and may not be available at the point at which customers enquire about it. This document may not contain all the information needed for customers to make a decision and they should seek advice.
Overall cost for comparison 12.7% APR representative variable based on 6 months at 0.98%. Lender’s arrangement fee is 1% of the loan amount. The actual rate available will depend on your circumstances. Ask for a personalised illustration.
largemortgageloans.com is a trading name of largemortgageloans.com Ltd. A fee of up to 1.17% of the mortgage amount is payable, of this 25% is payable on application and the remainder on completion, e.g. on a mortgage of £1,000,000 the fee would be £11,700 of which £2,925 would be payable on application. The precise amount will depend on your circumstances.
Your home or property may be repossessed if you do not keep up the repayments on your mortgage.
