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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.
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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.
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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. |
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