Example One
Client: Mr & Mrs A
Clients were selling their current home and purchasing another property close to their daughter. They had a buyer for their existing home and had found an ideal property in the area they wanted to live.
At the eleventh hour, their buyers withdraw from the purchase and Mr & Mrs A was under intense pressure to conclude the purchase of the new property as there was another potential buyer waiting in the wings. The agents for the new property gave the clients an ultimatum to complete the purchase within two weeks or the property would be sold to another buyer.
All the clients available cash was tied up in the equity of their current home and this was needed to complete the purchase of the new property.
A bridging loan was provided that released the equity on the client’s current home and funded the purchase of the new home. From receipt of the completed application form, through to completion took seven days.
The loan was provided for two months to allow Mr & Mrs A to fully market their property and secure a sale without having to reduce the price. In addition the loan was sufficient to include all interest payments, set up charges etc and the client had two months without having any concerns as to interest payments etc and could concentrate entirely on marketing their home and moving into their new home.
Example Two
Client: Ms B
Ms B had an excellent job, and wanted to build up a small portfolio of investment properties. She had some cash savings and long term funding in place. After intensive research she felt the best way to purchase the properties would be at auction.
Ms B was successful in her bid for a property at her first auction and managed to secure a property with a market value of circa £250,000 for just £190,000. A deposit of £19,000 was paid at the auction and an application lodged with her long term lender for the balance.
This is where the problems started. Whilst the long term lender was prepared to consider a loan of up to 85%, this would be based on the purchase price rather than the market value. Ms B had been expecting a loan of up to £212,500 – which would have provided additional funds for further purchases, whereas the lender only offered £161,500 – which left Ms B short of cash for the purchase.
Bridging finance is always based on the market value of a property, irrespective of other considerations. A loan of £175,000 was made available to Ms B to support the purchase, which with the deposit paid covered the purchase, set up charges and interest due on the loan.
The purchase was completed within 14 days [as per the auction terms] and as MS B now owned the property her lender was prepared to consider an advance based on the market value of the property. A loan of £212,500 was granted which repaid the bridging loan, and provided additional funds for further purchase.
Ms B has now purchased a further three properties using bridging finance and then refinance.
Can a Bridging Loan be arranged for me?
Yes if the amount you want to borrow is adequately secured on the properties that you have available as security. This will obviously depend on exactly on the amount you need to borrow. The best way is to requested a quote or more information. Please click the ‘get a quote’ icon below or click here.
Next Steps?
Bridging Quote
Obtain your no obligation Bridging Finance Quote –
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