Customers purchase, a “ bridge too far”??

Q

We need your assistance, if possible, to help us secure a property, rather quickly.

A couple of years ago, we purchased a second property, for £950K, using a bona fide, mortgage of £625K, supplied by Nationwide Building Society. Following some development work, we managed to augment the value to £1.3M.

The property has now been sold to a family that has been renting in the village, who heard through our gardener that we were considering selling.

As we are saving around £23K in estate agents fees and have achieved a premium price with a sale to cash buyers, we have agreed a protracted completion date of 4 months from exchange, in order to allow our purchaser to release his cash from multiple sources.

Unfortunately the completion date which is in 4 months’ time, is now causing us a problem.

We have been offered a property, in a highly sought after Cornish village, near Rock. The property is picture postcard perfect and would make a perfect second home and eventual retirement property. The vendor is moving downmarket and has found a property at the end of a chain and needs us to complete within four weeks.

The purchase price is £850K, and we have £180K available, however our income won’t stretch across the two loans to allow us to briefly own both at once, based on lenders’ income multiples. Obviously, once we receive the money from the sale of our existing property, we would redeem the loan used to purchase the intended Cornish property.

We have tried a lender that issues Holiday Let Mortgage loans, however they informed us that we did not have sufficient deposit to qualify and the loan required was too large to fit standard criteria.

Is there anything that you can do (quickly for us)?

Regards, Charles

A

Charles

We should be able to help you with this, and quickly. In this case, a bridging loan would be a perfect arrangement, because it is a “closed” situation, in that we know the completion date at outset.

These are the mechanics of how a bridging facility could work for you:

A first charge bridging loan facility of £670K would be arranged to allow the purchase of the new property; typically charged at an interest rate of 1.5% per month. Arrangement Fee – 1.5- 2% would be quite normal. A second charge would be taken over the property currently mortgaged to Nationwide, in order to tie in the equity. The loan would be penalty free. Valuations will be required on both properties at your cost, plus all legal fees. This pricing is purely indicative because each deal is bespoke, so we can build it around your requirements.

As speed is of the essence in this case, we would suggest that you contact the office as soon as possible and talk to Norman, one of our bridging finance specialists.