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Case Profile
The client wanted to purchase a commercial property through a bridging loan, and raise additional development funds to renovate it, planning to sell it afterwards. However, as a result of a relatively high LTV and the fact that the client required 100% of the development costs, finding a lender was a challenge.
Both clients live and work in London. In addition to their employment, they receive rental income from a number of properties in and around London.
They had found a commercial property which was currently being used as serviced offices. They wished to purchase the property in order to convert it into multiple residential apartments. Once the refurbishment was completed, the property would be sold. The proceeds of the sale would be used as both an exit to the bridging loan, and a repayment vehicle for the development finance.
They required 66% of the net purchase price of the property and an additional £200,000 in order to fund the development work. The gross development value of the property once the work had been completed was estimated to be £1.4 million.
In addition, it was vital that the bridging loan was in place within two weeks of the offer being made, in order for the transaction to be completed successfully.
Solution
Through our close contact with a range of lenders and finance providers we were able to arrange bespoke bridging and development finance for the clients.
Having taken the time to evaluate the clients’ circumstances fully, we were able to source a lender who was able to provide them with a bridging loan at 75% LTV, as well as 100% of the funding for the conversion works. The lender was happy for the proceeds of the sale of the flats to be used as an exit from the bridging loan and as a repayment vehicle for development finance.
By devoting the time to working closely with the lender, the surveyors, solicitors and the clients, we were able to arrange the finance in just 14 days; decisions could be made and acted upon quickly.
This allowed our clients to receive the funding in time to complete the transaction and begin renovating their new property.
Deal Highlights
| Loan amount: | £497,137.50 net and £562,500 gross |
| Rate: | 0.90% pcm |
| LTV: | 75% gross |
| Term: | 9 months |
| Type: | Retained interest |
| Loan purpose: | Bridging loan and development finance |
| Lender’s arrangement fee: | 2% of the loan amount |
| Early repayment charges: | 1 month's interest = £7,762.50 |
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.
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. You may have to pay an early repayment charge to your existing lender if you re-mortgage.
