Bridging Loan to Secure Complex HMO Purchase in Eight Days
The Client: An experienced landlord looking to expand their property portfolio with a new purchase.
The Property: Located on the outskirts of London, the property consisted of seven bedrooms and a kitchenette within the loft conversion. The property was currently let as an HMO.
The Finance: Having negotiated the property price down considerably, the vendor demanded auction-timescale speed for the rest of the process. Needing to exchange within ten days and complete six weeks after, we were looking to source our client bridging finance with an exit to an HMO buy to let mortgage. Alongside this application, we were already proceeding with the exit buy to let mortgage application to allow our client to exit the bridge quickly.
The Challenge: The initial challenge we faced with this case was the strict timescale we had to work to. Getting a valuation booked in and the report back quickly was the first hurdle, but the subsequent report from the valuer threatened to delay the rest of the case. The valuer felt that the local area lacked sufficient demand for an HMO, casting doubt on the loan exit strategy of an HMO refinance after acquisition via the bridge.
The Solution: With the valuer not convinced we had a suitable exit to the bridge, and not prepared to recommend the property to the lender on this basis, we had to rethink our application exit strategy. Since we were keen not to lose a property with so much potential at such a competitive price, we suggested to our client that off the back of the valuer’s comments, they offer to remove the kitchenette from the loft conversion during the bridge. This change would make the property more of a traditional home and reinstate the exit as a conventional BTL refinance. After liaising with the lender and the valuer, both agreed to this amended structure for the deal. The case was accepted and, despite the initial challenge from the valuer, still proceeded to offer eight days from submission enabling the exchange.
Our instant access to underwriting and strong relationship with the bridging lender, who always offers excellent speed, was crucial in helping us adapt on the fly to keep the deal alive for the client.
We’re proceeding with the exit buy to let mortgage with another lender, who is happy to lend on the property as an HMO as their valuer was content that there is demand in the area for this property type. Our client has also obtained an HMO licence from the local authority.