Property refinancing helps unlock funds and consolidate debt

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The global pandemic has resulted in an unprecedented number of property developers struggling financially. Many developers have found themselves experiencing the need to raise funds quickly, either to pay off their overdue debts or to compensate for an unforeseen lack of income. Bridging loans are often used in this instance. While bridging loans can be a useful financial instrument, allowing borrowers to access funds quickly and accelerate the timeline of development projects, high-interest rates and the short timeframe for repayment means that they aren’t suitable as a long-term financial solution. Therefore, the borrower must find a way to pay off the bridging loan as soon as its term has expired. Overdue bridging loans may incur costly arrangement fees and other financial penalties.

Refinancing can be an ideal solution for property developers who need to pay off priority debts. Refinancing allows developers to unlock funds and consolidate their debts into stable, monthly payments spread out over an extended timeframe.

Case profile

Our client urgently needed to refinance their multi-unit freehold property to clear an overdue bridge loan. Several factors further complicated the borrower’s profile, including the properties’ size and the property owner’s lack of an HMO licence. The multi-unit property consisted of several small studio flats below thirty square meters, which fell short of traditional banks suitability criteria.

Solution

Complicated situations often require a highly personalised solution. After several lengthy consultations with lenders, Associate Director Mark Pattanshetti managed to secure a bespoke agreement with a lender who offered a 75% loan-to-value refinancing solution on a five-year fixed rate. Securing a new loan enabled the owner to settle their overdue bridge loan while consolidating their mortgage into a stable, monthly payment.

If you need to pay off priority debts quickly, largemortgageloans.com are experts in designing specialist, innovative financing solutions. We take a bespoke approach to assessing individual cases and are sure to find a solution that will fit your needs. Find out more about our buy-to-let refinancing solutions here.

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Your home or property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. Changes in the exchange rate may increase the sterling equivalent of your debt. You may have to pay an early repayment charge to your existing lender if you remortgage. Think carefully before securing any other debts against your home.  

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