AREA: London
AMOUNT RAISED: £287,000
PRODUCT USED: Bridging loan
Client Scenario
A successful business owner spotted a potential goldmine – a semi-commercial property at auction. The building, comprising a ground floor shop and two flats above, presented an exciting opportunity for conversion and profit. However, with only 28 days to complete the purchase post-auction, time was not on the investor’s side.
As a newcomer to property development, the investor faced several hurdles:
- No track record in property investment
- Limited knowledge of property finance options
- Complex property type (mixed-use) adding to lending complications
- Tight deadline for securing funds
Many traditional lenders shy away from first-time developers, especially for projects involving property conversion. The investor needed to find a financial solution that could accommodate his lack of experience and be arranged swiftly.
Funding Solution
Recognising the need for specialist help, the investor sought advice from an experienced finance broker. The broker quickly identified that an auction finance bridging loan would be the most suitable option and sprang into action:
- Assessing the investor’s plans and financial situation
- Identifying specialist lenders comfortable with first-time developers and mixed-use properties
- Preparing a comprehensive application package, including a detailed business plan and exit strategy
- Managing communication between all parties to ensure smooth progress
- Resolving queries about the planned conversion by liaising with the local planning department
Final Outcome
Key Details:
- Loan amount: £287,000
- LTV: 65%
- Property value: £441,500
- Interest rate: 0.89% per month
- Loan term: 9 months
Thanks to the broker’s expertise and proactive approach, a fast bridging loan offer was secured within 10 days of the initial enquiry. The entire process, from application to funds release, was completed in just 18 working days – well within the auction deadline.
The bridging loan provided the investor with:
- Quick access to necessary funds
- Flexibility to carry out the planned conversion
- Time to refurbish and sell the property without the pressure of monthly repayments
This case demonstrates that with the right guidance and financial solution, even first-time developers can successfully deal with the challenges of property investment and auction purchases. It serves as an inspiring example of how expertise, determination, and swift action can turn a property newcomer into a successful developer.