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By securing a bridging loan, we were able to help our client release equity from her residential home, purchase a new property, and then set up a buy to let mortgage. 

The Client

Our client is an experienced buy to let landlord purchasing a trading guest house located in Kent.   

The Property

The client’s home was a five-bed Victorian house in the South-East. Upon purchasing the guesthouse, our client was looking to move in and let her old home out as a rental investment property.

The Finance

Our client required finance to clear her small residential mortgage and release equity from the property.  This would allow her to raise the deposit for the guesthouse. The client already had a commercial mortgage agreed for the guesthouse purchase.

The Challenge

The original plan was for our client to refinance her existing home onto a rental investment mortgage, raising the capital she needed for the deposit in the process.

However, two lenders turned this down, considering it to be outside of their policy.  They would not allow capital raising for business purposes.

The Solution

Using our experience of complex commercial cases and our knowledge of the market, we reassured our client and quickly identified a different solution to secure the finance.

We approached a reputable bridging lender about the case. We wanted to use a bridging loan to clear the existing residential mortgage for our client and release additional funds in respect of the deposit required to purchase the guesthouse.

Our client was able to secure the purchase of her new business venture, moved out and let out her old house. In three to six months’ time we would help her exit from the bridge onto a buy to let mortgage using evidence of the rental income to support the application.  

By looking for alternatives and arranging this bridging loan for our client, we sourced and secured the offer of finance within a month.

Property Details

Property value: £975,000

Loan amount: £731,000 (£650,490 net with fees and interest deducted)

LTV: 75%

Rate: 0.75% per month

Term: 12 months

Bridging loan payment:  £5,482.50 per calendar month

Lender arrangement fee: 2% deducted from gross loan

Rental income: £3,500 per calendar month (estimated)

 

Have a similar case? 

If you have a similar case you would like to discuss, get in touch, and one of our expert mortgage brokers will be happy to advise. 

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