Bridging loan on residential property to raise finance for business purposes

THE SCENARIO

Using a residential property to raise finance for business purposes is typically very difficult. However, this is precisely what a recent client of mine hoped to achieve. I pride myself on finding solutions for difficult cases, so I took on this case knowing what a challenge it would be.

My client had been gifted a property by his sister, and wanted to raise £126,000 worth of finance to invest into his rapidly growing business. There were numerous other factors which complicated the case further. He had only owned the property for a few weeks, but already wanted to raise finance on it; most lenders require the client to have owned the property for at least 6 months before remortgaging it.

He also needed the funds within a few weeks, and had plans to sell the property within the year. This meant he was happy to use a short-term financing option. However, most normal lenders are unable to complete such a transaction within a few weeks, which was what he required. To further complicate the issue, his sister was also still living in the property and he was renting elsewhere.

OUR SOLUTION 

My first task was to find a bridging lender who would be happy for my client’s sister to live in the property until it was sold; this can be deemed unacceptable by some bridging lenders because it can slow down the sale and therefore make the loan riskier.

I used my extensive lender network to find a bridging lender who would accept all of these factors, meaning I could complete within just two weeks. I secured an interest rate of just 0.75% of the loan amount each month—many lenders charge up to 1% a month.

As an additional benefit, the loan had no early repayment charges so my client can pay off the loan whenever the property is sold with no charges. This was a fantastic result for a complicated case.

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