The Client:
Our client was an experienced landlord who had completed several refurbishment projects over the past few years. The property was a one-bedroom flat being sold at auction and was in need of light refurbishment as it was not in a lettable condition. Our client needed a cash sum within 28 days through a short-term, high LTV loan.
At a Glance:
- Experienced landlord who wanted to buy an auction property while minimising the deposit required.
- Sought the highest loan-to-purchase-price available.
- Property in need of light refurbishment, purchased below market value at auction.
The Case:
Our client hoped to buy a London one-bedroom property at auction. Although an experienced landlord, the client needed to raise funds to complete the auction purchase.
While asset rich, buy to let investors commonly arrange finance to access equity or release cash for further property purchases. While there are several options available to do this, borrowing against a prospective purchase property's value on a short-term basis can be a quick and assured way to access the funds they need. With minimal underwriting required and low investment necessary by the investor to satisfy lending criteria, short-term finance created the right funding structure for the opportunity.
While the purchase price was below market value, the lender was being asked to advance funds based on the higher valuation rather than the agreed purchase price, increasing their exposure should the property need to be sold quickly. Many lenders calculate maximum borrowing against the lower of the purchase price or market valuation, making this type of request outside standard lending criteria.
The Challenge:
The main challenges faced by the landlord were:
- The property was not in a readily lettable condition.
- The client only had 28 days to complete the purchase.
- An agreed purchase at below market value presented a potential credit risk to lenders.
- Lending needed to achieve as high a loan-to-purchase-price as possible, allowing the client to retain more capital for the refurbishment rather than using it towards the deposit.
The Solution:
Our broker was able to leverage his expert knowledge of lenders to support our client in achieving their goal. The client wanted to borrow as much as possible against the day-one purchase price. Through his knowledge of the market, our broker sourced a lender able to provide up to 80% LTV or 90% loan-to-purchase-price, whichever was lower. This represented a significantly higher level of borrowing than most bridging lenders would offer and provided more favourable terms for the client.
The lender also offered the most competitive day-one net loan available from the lenders our broker worked with. The streamlined nature of bridging finance also helped ensure funding could be delivered within strict auction deadlines.
This reduced the deposit required compared with other bridging loan options.
A pivotal factor was the fast-track delivery of finance, which meant our client had access to the funds required for the purchase within the auction's 28-day completion timeframe.
Furthermore, having worked with the lender on similar cases previously, our broker was confident they could complete the case within the required deadline.
In addition to securing the bridging loan, our broker also arranged the loan exit strategy. To support the client and ensure they maintained liquidity while retaining equity, our broker arranged a refinance against the property's increased value following refurbishment.
Once the renovation works had been completed, our broker secured a competitive five-year fixed-rate mortgage at 80% LTV against the new market value. The additional equity released through the refinance was subsequently used to fund further auction property purchases using the same investment strategy.
The Finance:
Property value: £250,000
Purchase price: £245,000
Loan amount: £200,000
LTV: 80% or Loan to purchase price 82%
Rate: 8.4% fixed for 1 years*
Term: 1 year, interest only
Monthly mortgage payment: £0 (retained)
Lender arrangement fee: 2% (£4,000)
ERC's - N/A but they will charge a minimum of 3 months interest.
*Rates as at January 2026
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