The Scenario
A couple were in the process of buying their dream home in Hampstead, but just before completing, their buyer pulled out of the sale of their current property in Richmond.
Without the sale proceeds, they risked losing the Hampstead home, which they had already secured at £7.8 million.
They needed a short-term finance solution that would allow them to complete the purchase without waiting for a new buyer. They also wanted to avoid any monthly repayments while they waited for their Richmond property to sell.
The Challenge
The main issue was the size of the loan. Lenders needed to be confident that the existing property would sell within the 12-month timeframe of the bridging loan. The clients also didn’t want the loan to be secured against both properties as they believed that may slow things down, which made the lender’s valuation and risk appetite even more important.
Find out Your Options
What We Did
We discussed the case with bridging lenders that are experienced in large-value transactions and understand high-end property markets.
The lender was happy with the combined value of both properties and agreed to lend against the new Hampstead home only, without requiring a charge over the Richmond property. They were confident that the Richmond property would sell within the loan term and issued a formal offer within one week, after confirming their turnaround times were generally quick at this time.
The Solution
The lender offered a 12-month bridging loan using the future sale of the Richmond property as the repayment strategy. There were no monthly payments required, the loan, including rolled-up interest, would be settled in full once the Richmond property was sold which happened a few months down the line when they secured another buyer.
Why It Worked
This solution:
- Allowed the clients to complete on the Hampstead property without delay
- Required no monthly repayments, keeping cash flow simple
- Was secured only against the new property, not both
- Was agreed and issued quickly, helping them stay on track with the purchase
The Result
The clients successfully bought their new home in Hampstead and cleared the bridging loan once their previous home in Richmond was sold. They paid a premium in needing to take a bridging loan, but they felt the loss of their new property would be a more significant expense to them.
Need Short-Term Finance?
If you’re facing a chain break or need fast access to funds to secure a property like in this case study, a bridging loan might be the right fit, however, they are not suitable for everyone so you should always take professional advice.
Contact us to find out how we can help.
