
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
11th September 2017