Auction finance during Christmas holidays to buy office block

The client is an IT contractor living in London, who owns one rental property. He had decided to expand his portfolio and had his sights set on buying a bank with offices above which was offered for sale in a forthcoming auction. The property was located in prime high street location in a town on the south coast.

Purchases at auction have to be completed within 28 days so finding a lender that was prepared to act quickly was key. Most buyers in this situation use bridging finance because it’s quick; however, it can be very expensive.

In addition to the tight timescale (which was exacerbated by the fast-approaching Christmas holidays), the client was looking to borrow a rather high loan to value of 75%. Most commercial investment property lenders only go up to 60-65% LTV.

Instead of going to a bridging provider, I contacted a specialist lender that has a reputation for speedy application processing. Prior to the auction the lender:

• Obtained a desktop valuation of the property in order to feel comfortable with the security
• Provisionally booked a valuer to attend the site shortly after auction was over
• Made some preliminary checks on the investor to ascertain his suitability

The investor’s bid was successful and the lender processed the application within the timescale required and without charging a premium rate for the privilege. Here are the details of the deal:

Property value: £850,000

Loan amount: £637,500

Loan to value: £75%

Rate: Bank Rate + 3.49% loan term tracker

Term: 14 years interest only

Monthly rental income: £6,250

Annual yield: 8.8%

Lender arrangement fee: 1.5%

Completion date: January 2015

This is just one example of how I've helped a client secure a commercial mortgage. 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.


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