I was recently able to assist with arranging a short term funding solution for a client with an unusual situation and a raft of background issues which meant he was struggling to arrange finance.
My client was a businessman in his thirties, who worked on a self-employed basis. His business had rapidly become successful and he was not reporting an income of over £100,000 per year. However, he had a tax bill which needed paying, and was currently illiquid. He therefore needed to find a short-term funding solution which would allow him to repay this bill.
My client also owned an unencumbered property worth approximately £500,000. Typically, an unencumbered property would be considered an ideal asset against which to secure finance. In this instance, this was not going to be possible.
Unfortunately, he had a number of background issues which made this case extremely challenging. For example, he had a number of CCJs over the last seven years, two of which were still outstanding. Outstanding CCJs make it virtually impossible to secure a first charge loan against a residential property, without paying astronomical interest rates. Additionally, first charge mortgages cannot be used to pay tax bills.
I therefore suggested the solution of using a short-term funding solution in the form of bridging finance. This would enable my client to pay his tax bill, using the sale of his property as the exit strategy. As the property is unencumbered, I knew he would be able to borrow at under 50% loan to value, and therefore access the lowest rate of the lender I had in mind.
This lender is cheap and fast, and I was able to secure my client a rate of 0.49% a month for twelve months. Additionally, this lender is able to roll the interest on top of the loan instead of retaining it.