Introduction
We recently helped a retired customer arrange a bridging finance solution for a property purchase in Guildford, Surrey. Our customer wanted to move closer to family but needed to purchase their new home before selling their existing property.
The problem we needed to address was arranging short-term borrowing quickly, without requiring monthly mortgage payments during the transition. Our customer owned their existing home outright and intended to repay the borrowing once that property was sold.
After researching suitable lenders and discussing the circumstances with the lender in advance, we identified Precise Mortgages and secured an Agreement in Principle, allowing the customer to progress their bridging finance application.
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The Scenario
Our customer was retired and looking to move to a new main residence in Guildford, close to family.
They already owned a residential property without a mortgage and had access to additional investment funds. However, they had not yet sold their existing home and needed to secure the new property without waiting for that sale to complete.
The new property had a purchase price of approximately £715,000, and our customer required around £430,000 in short-term borrowing.
The intention was straightforward: purchase the new home, sell the existing property and use the sale proceeds to repay the borrowing.
A conventional residential mortgage was not considered suitable because of the required completion timescale and the potential early repayment charges when the existing property was sold.
Instead, our customer needed a short-term arrangement that would provide access to funds while allowing them to repay the borrowing following the property sale.
Importantly, they wanted to avoid monthly mortgage payments and minimise the amount of investment funds they needed to use towards the purchase.
The Challenge
Although our customer had substantial property equity and additional investments, several factors made arranging the finance more complicated.
Purchasing Before Selling the Existing Home
The new property needed to be purchased before the existing residence had been sold.
This is commonly known as a property chain break, where short-term finance allows someone to complete a purchase without relying on the proceeds from their current property’s sale being available immediately.
The transaction was time-sensitive, so finding a lender capable of progressing the application quickly was essential.
Borrowing in Later Life
Our customer was retired, making the structure of the borrowing crucial.
Rather than relying on ongoing employment income to support conventional monthly mortgage repayments, the proposed arrangement was based on the equity held in their existing property and the planned sale.
The lender therefore needed to be comfortable with the customer’s circumstances and the proposed exit strategy.
Avoiding Monthly Payments
Our customer wanted to preserve their available investment funds during the move.
A bridging loan with retained interest would allow interest to be accounted for within the loan arrangement rather than requiring monthly interest payments.
This would help manage cash flow while the existing property was being sold, although the interest would still form part of the overall borrowing cost.
Valuation and Legal Timescales
The transaction also required a suitable valuation and legal arrangements to be established quickly.
A physical property valuation could introduce additional time into the process, so the availability of an automated desktop valuation was an important consideration.
We also needed to identify suitable solicitors and establish whether joint legal representation could be used to help the transaction.
What We Did
We carried out whole-of-market research into regulated bridging finance suitable for a residential property purchase.
Our research focused on lenders that could consider a short-term first-charge bridging loan, with the sale of the customer’s existing residence forming the planned repayment strategy.
We assessed several loan-to-value options, including borrowing levels around 50%, 60% and 65%.
This was particularly important because our customer had access to investment funds but preferred not to use more of those funds than necessary.
By comparing different borrowing levels, we could assess the balance between the loan amount, borrowing costs and the customer’s available liquidity.
Discussing the Case With the Lender
Before placing the application, we contacted the lender and its Business Development Manager to discuss the customer’s circumstances.
We wanted to establish whether the proposed property purchase, short-term borrowing requirement and planned repayment through a property sale could be accommodated.
We also reviewed the lender’s valuation and legal requirements because these could directly affect the completion timescale.
Streamlining the Application
We narrowed the options down to consider an Automated Valuation Model (AVM), which uses property data to assess value without automatically requiring a physical inspection.
We obtained an Agreement in Principle through a soft credit search and helped prepare the supporting application information, including identification, proof of address and bank statements.
We also liaised with the customer’s family representative and recommended specialist solicitor options that could accommodate joint legal representation.
These steps helped establish a suitable route for progressing the application while addressing the transaction’s tight timescale.
The Solution
We recommended a regulated first-charge bridging loan with Precise Mortgages.
The proposed arrangement included:
- A 12-month bridging loan term.
- Approximately £430,000 in net borrowing.
- A fixed-rate bridging product.
- Retained interest, avoiding monthly interest payments.
- Repayment through the planned sale of the existing residence.
- A desktop valuation approach.
- Joint legal representation with suitable solicitors.
A particularly relevant feature was the ability to repay the loan early without an early repayment charge under the selected arrangement.
Interest would be calculated according to the actual period of borrowing, meaning the customer would not necessarily need to retain the loan for the full 12 months if their existing property sold sooner.
This suited their intention to use the bridging facility temporarily rather than commit to long-term mortgage borrowing.
Why This Solution Worked
Precise Mortgages was identified as suitable because its regulated bridging proposition could accommodate the customer’s proposed property purchase and sale-based exit strategy.
The retained interest structure addressed one of the customer’s main priorities: avoiding monthly mortgage payments while moving between properties.
The lender’s desktop valuation capability was also important because it offered a way to progress the valuation process without the potential delays associated with arranging a physical inspection.
The availability of joint legal representation helped address another practical requirement of the transaction.
Most importantly, the proposed finance was structured around a clear repayment strategy rather than ongoing borrowing throughout retirement.
The customer intended to repay the bridging loan from the proceeds of selling their existing unencumbered home.
The Result
We successfully obtained an Agreement in Principle with Precise Mortgages and progressed the customer to a full bridging finance application.
The application was structured around the required borrowing, the customer’s preference for no monthly interest payments and the planned sale of their existing property.
Joint solicitor representation was also arranged as part of progressing the transaction.
Our customer was pleased with the service and the assistance provided in identifying a suitable route forward.
The confirmed progress was an Agreement in Principle and full application. A formal mortgage offer and completion of the property purchase have not been independently confirmed in the supplied case information.
What This Case Shows
It shows how bridging finance can be considered for customers moving home later in life, particularly where they have significant property equity but need to purchase before selling their existing residence.
Being retired does not necessarily prevent someone from accessing suitable short-term property finance. However, the lender must be comfortable with the customer’s circumstances, the property security and how the borrowing will be repaid.
It also highlights the importance of comparing different borrowing levels, understanding retained interest and confirming lender valuation and legal requirements early in the process.
For customers seeking mortgage advice in Guildford, identifying the appropriate borrowing structure can be particularly important where a property chain or completion deadline creates additional complications.
Need Bridging Finance to Buy Before Selling?
If you are purchasing a property before selling your existing home, or need short-term borrowing to break a property chain, Kerr & Watson can help.
We provide independent, whole-of-market mortgage advice and can assess suitable bridging finance options based on your circumstances, property and repayment strategy.
Contact Kerr & Watson to discuss your requirements and explore the options available to you.
