Bridging finance to transfer property ownership

THE SCENARIO

One of my key strengths as a broker is being able to look at a complicated case and create a logical solution. I was recently able to display this ability for two clients who had a rather unusual situation. Their current broker was unable to find them a resolution, so I was approached to see if Enness could assist.

My clients were two business partners, who had a medium sized property portfolio. My clients were looking needed to transfer property ownership—currently held by a third associate, who was looking to move away from being a landlord—into their names. Both properties in question had remaining mortgages of £55,000; in order to transfer the ownership of the properties, my clients purchased the properties from the third partner at this price, which was significantly under the market value.

They then hoped to remortgage the properties onto a buy to let mortgage. However, when a property has been purchased for significantly under the market value, lenders will typically not approach the case until at least six months later, due to potential claw backs by the HMRC if the previous owner goes into bankruptcy.

This was not initially a problem, until another opportunity arose. Several months after this initial transaction, my clients then wanted to extend their property portfolio with the purchase of another buy to let. They needed to move quickly on this, or they risked losing the property they had in mind, which was a desirable transaction.

OUR SOLUTION

This was a complicated scenario to say the least—however, I was confident I could find a solution. To achieve this, I arranged for my clients to take out a bridging loan against the properties at their market value. This loan would enable by clients to place the deposit for the new property. Then, once enough time had passed for lenders to be comfortable with refinancing the property onto a buy to let mortgage, they would be able to exit the bridge by remortgaging onto a buy to let product.

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