Complex Bridging Case to Secure Guesthouse Purchase

Complex Bridging Case to Secure Guesthouse Purchase

19.01.22 | Written by: Andy Elley

The Client: Our client is an experienced buy to let landlord purchasing a trading guest house located in Kent.           

The Property: The client’s home was a five-bed Victorian house in the South-East. Upon purchasing the guesthouse, our client was looking to move in and let her old home out as a rental investment property.

The Finance: Our client required finance to clear her small residential mortgage and release equity from the property.  This would allow her to raise the deposit for the guesthouse. The client already had commercial mortgage agreed for the guesthouse purchase.

The Challenge: The original plan was for our client to refinance her existing home onto a rental investment mortgage, raising the capital she needed for the deposit in the process. However, two lenders turned this down, considering it to be outside of their policy.  They would not allow capital raising for business purposes.

The Solution: Using our experience of complex commercial cases and our knowledge of the market, we reassured our client and quickly identified a different solution to secure the finance. We approached a reputable bridging lender about the case. We wanted to use a bridging loan to clear the existing residential mortgage for our client and release additional funds in respect of the deposit required to purchase the guesthouse. Our client was able to secure the purchase of her new business venture, moved out and let out her old house. In three to six months’ time we would help her exit from the bridge onto a buy to let mortgage using evidence of the rental income to support the application.  

By looking for alternatives and arranging this bridging loan for our client, we sourced and secured the offer of finance within a month.

If you would like to discuss whether a bridging loan could be beneficial for you, or if you’re looking to invest in commercial property, please call:

Andy Elley - Head of Commercial Mortgages

07964 916503 

andye@mortgagesforbusiness.co.uk

 

See the property details below:

Property value: £975,000

Loan amount: £731,000 (£650,490 net with fees and interest deducted)

LTV: 75%

Rate: 0.75% per month

Term: 12 months

Bridging loan payment:  £5,482.50 per calendar month

Lender arrangement fee: 2% deducted from the gross loan.

Rental income: £3,500 per calendar month (estimated)

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

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

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