Our client is a self-employed consultant who also owns a few rental properties. He had negotiated the purchase of a flat after it failed to reach its reserve price at auction but was still required to complete within the normal auction timescale of 28 days.
The flat was on the ground floor of a nice block in a vibrant area of North East London. Its great road and tube links made it ideal accommodation for young City or West End workers not able to afford to live closer to the capital.
As the flat was in a lettable condition we identified a buy to let lender who agreed, in principle, to provide a mortgage within the short timescale. However, two and a half weeks after submitting the application, the lender changed its mind which left us with very little time to find an alternative. We suggested the client opt for a bridging loan in order to get the deal done and avoid losing his deposit, then refinance onto a buy to let mortgage further down the line.
We identified a lender who was happy to help and pushed through the transaction in just 15 days from start to finish, (with two of those days lost waiting for the vendor to send through necessary information).
Because there are very few lenders that will allow remortgaging within six months of purchase, we agreed finance with the short term lender for eight months – building in two months’ leeway in case the buy to let lender’s administration proves sluggish when the application is submitted.
Here are the details of the deal:
Property value: £205,000
Loan amount: £143,500
LTV: 70% LTV
Rate: 0.69% pm
Term: 8 months interest serviced
Arrangement fee: 1.95%
Completion date: September 2014
This is just one example of how I've helped a client secure a bridging loan. To see more of my case studies please visit my profile page. And if you have any funding requirements, please do not hesitate to contact me. My direct line and email address can be found below.