AREA: London
AMOUNT RAISED: £600,000
PRODUCT USED: Bridging Loan
Client Scenario
Our client, a successful restaurateur in Manchester, had the opportunity to purchase a prime commercial property in London. The property, valued at £1.2 million, was in a highly sought-after location and wouldn’t stay on the market for long.
The client owned his current restaurant premises in Manchester, valued at £800,000, with no outstanding mortgage. He planned to sell this property to finance the London purchase but needed time to find the right buyer to maximise his return.
Funding Solution
The client needed to raise £600,000 quickly to secure the London property while his Manchester premises were on the market. Traditional commercial mortgages would take too long to arrange, potentially causing him to lose out on this opportunity.
After assessing the client’s situation, we recommended a bridging loan as the most suitable option.
Here’s how we structured the solution:
- Loan Amount: £600,000
- Security: First charge against the Manchester property
- Loan-to-Value (LTV): 75%
- Term: 12 months
- Exit Strategy: Sale of the Manchester property
We quickly sourced suitable bridging loan options and within 48 hours secured an Agreement in Principle (AIP) from a lender offering competitive rates.
Our team managed the entire application process, liaising between the client, lender, and legal representatives.
During the application process, we encountered and resolved several challenges:
- Property Type: The Manchester property was a mixed-use building (restaurant with residential flat above), which some lenders were hesitant about. We identified a lender comfortable with this property type.
- Time Pressure: The seller in London wanted to complete within 6 weeks. We expedited the process by prioritising this case and maintaining constant communication with all parties.
- Exit Strategy Verification: The lender required evidence that the Manchester property was actively marketed. We helped the client compile a comprehensive sales and marketing plan to satisfy this requirement.
Final Outcome
Thanks to our expertise and efficient management of the process:
- The bridging loan was approved and funds were released within 5 weeks of the initial enquiry.
- Our client successfully secured the London property, beating several other interested buyers.
- The Manchester property sold within 9 months, allowing the client to repay the bridging loan early, saving on interest costs.
- The client’s business plans were realised without the loss of a prime opportunity.
This case study demonstrates how bridging finance, when used appropriately, can be a powerful tool for business growth.
It highlights the importance of:
- Quick decision-making in competitive markets
- Having a clear exit strategy
- Working with an experienced broker who can navigate complex scenarios
- The flexibility of bridging loans compared to traditional financing options
At Respect Capital, we pride ourselves on finding innovative financial solutions tailored to our clients’ unique situations, helping them achieve their business and property goals.