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Bridging loan to buy and develop 4-bed house

Bridging loan to buy and develop 4-bed house

We were approached by a married couple who needed finance to help buy a dilapidated 4-bed house which they wanted to develop.

The couple are full-time property developers and when talking through their requirements, it became clear that they had a Plan A and a Plan B for the property:

  • Plan A: Subject to planning permission, convert the property into flats, retain the freehold of the building and sell the flats on long leases.
  • Plan B: Renovate the house to a high standard and sell on.

Looking at their business plan, it was clear that Plan A would make our clients more money but the figures for Plan B also stacked up which meant that finding a lender would be fairly straightforward.

We contacted a specialist bank, which not only has a slick application process but it also has some extremely competitive bridging rates for these types of deals.

Within a day, we had obtained an agreement in principle, so we submitted a full application on our clients’ behalf.

The following terms were promptly agreed allowing our clients to successfully complete the purchase:

Property Details

Property value: £670,000

Loan amount: £502,500

LTV: 75%

Rate: LIBOR (minimum 0.75%, variable) + 8.25%, for an effective rate of 0.75% pcm

Term: 12 months

Borrower: Trading Ltd company

Monthly payment: NIL – £43,828 deducted from the loan advance to cover interest

Lender facility fee: 1.7% (£8,543) added to the loan

Lender exit fee: NIL

Consultant: Jeni Browne, 01732 471647

NB: ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Mortgages for Business Ltd is registered
in England and Wales No. 2502713.

Registered office:
17 Kings Hill Avenue,
Kings Hill, West Malling,
ME19 4UA.

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Mortgages for Business Ltd is authorised and regulated by the Finance Conduct Authority (No. 313537) to transact regulated mortgages. We are a credit broker, not a lender. We work with the whole of market in sourcing a lender for you; we may receive a commission from the lender, and this amount varies between lenders. The FCA does not regulate some investment mortgage contracts. Mortgages for Business Ltd is a founding member of the National Association of Commercial Finance Brokers, the body that promotes best practice within the commercial finance industry. Telephone calls may be monitored or recorded for training purposes.

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