Bridging Loan, £9M Property, No AUM

• Client: UK resident
• Property: North London property valued at £9M
• Mortgage amount: £3,526,770
• LTV: 40%
• Product: Bridging loan with rolled-up interest
• Interest rate: 0.48% per month
• Term: Up to 12 months
• AUM: None required

Bridging finance can provide a short-term solution where a borrower needs to repay an existing mortgage quickly but does not want to commit to a new long-term mortgage. This can be particularly relevant where a property is already being marketed for sale and the borrower expects the sale proceeds to provide the eventual repayment route.

Enness was approached by a UK resident whose interest-only mortgage on a North London property had reached the end of its term. The property was valued at approximately £9M and was already actively being marketed for sale.

The existing mortgage needed to be repaid within a relatively short timeframe. Entering into another conventional mortgage would not have been particularly suitable given the client’s intention to sell the property. The client therefore required short-term finance that could provide sufficient time for the sale to complete.

The proposed borrowing was £3,526,770 against the £9M property, representing 40% loan to value (LTV). The relatively low LTV provided substantial equity in the property and was an important consideration when approaching specialist bridging lenders.

Another important consideration was the client’s preference for a straightforward structure without an assets under management (AUM) requirement. The client did not want to transfer investments to a lender as part of the financing arrangement.

Enness identified bridging finance as a suitable short-term option and approached a lender able to consider the transaction based primarily on the underlying property security and proposed exit strategy. Rather than requiring the same level of income and expenditure assessment associated with a conventional mortgage, the lender focused on the property and the planned sale.

Following negotiations, Enness secured a bridging loan of £3,526,770 at a rate of 0.48% per month for a term of up to 12 months. No AUM arrangement was required.

The interest was structured on a rolled-up basis, meaning it did not need to be serviced through monthly payments during the term. Instead, the accrued interest was added to the amount repayable when the facility was redeemed. This structure reduced the immediate monthly cashflow requirement while the property was being sold.

The transaction was completed within five working days, providing the client with a short-term solution to repay the existing mortgage while allowing additional time for the sale of the North London property to complete.

The case demonstrates how bridging finance can be used to address time-sensitive refinancing requirements where a property is already being marketed for sale. A clear exit strategy, substantial underlying equity and an appropriate lender can be particularly important when arranging this type of short-term finance.

For property owners requiring short-term funding against high-value UK property, specialist bridging finance can provide an alternative to entering into a new long-term mortgage, subject to valuation, lender criteria, due diligence and a viable repayment strategy.

Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal, tax or investment advice. Finance is subject to status, underwriting, valuation, security, property suitability, due diligence and lender criteria. Terms, rates, LTVs, fees and availability may vary depending on individual circumstances.

Risk Warning:
Property securing finance may be repossessed if repayments are not maintained. Bridging finance is short-term borrowing and can carry higher costs than conventional mortgage finance. Where interest is rolled up, the amount owed increases over the term of the facility. Borrowers should have a clear and realistic exit strategy and consider the risks associated with changes in property values, sale timescales, refinancing conditions and the ability to repay the borrowing.