Regulated Bridging Loan for HNW Couple to Assist with the Purchase of their New Home

• Client: HNW Couple
• Property: Main residence valued at approximately £4.4 million
• Loan: £2 million+
• Product: Regulated bridging loan
• Term: 18 months
• Rate: 9.09% variable

Enness was approached by a high-net-worth couple looking to secure bridging finance against their existing main residence so they could purchase a nearby property that offered a more suitable layout for their changing requirements.

The clients had recently built their existing home to a very high specification, but an unforeseen incident meant that the property was no longer suitable for their needs. They therefore wanted to move to a more appropriate nearby residence while retaining the flexibility to sell their current home at the right time.

Obtaining a traditional mortgage was not a viable option due to the clients’ ages and income profile. A regulated bridging loan therefore provided a suitable route to funding the new purchase while the existing property was prepared for sale.

The clients also required a longer term than was available through the other regulated bridging options they had considered. Where the proposed exit involves the sale of the secured property, the available term and lender requirements can vary depending on the individual transaction and lender criteria.

This did not suit the clients’ circumstances. They wanted sufficient time to sell their existing home when market conditions were most favourable rather than having to work to a shorter repayment timeframe. Several other brokers had presented options with different terms and a maximum 12-month term, which did not provide the flexibility the clients required.

Enness undertook detailed fact-finding to understand the clients’ circumstances, their preferred timeframe and their intended exit strategy. This allowed Enness to approach lenders that could consider a longer-term structure for the proposed transaction.

Using its access to the UK lending market, Enness secured an 18-month regulated bridging facility of more than £2 million against the clients’ approximately £4.4 million main residence. The facility was arranged at a variable rate of 9.09%, providing the clients with an additional six months compared with the 12-month terms they had previously been offered.

The extended term was particularly relevant because it gave the clients additional time to sell their existing home. Rather than working to a shorter bridging deadline, they had more time to assess market conditions and pursue a sale in line with their circumstances and intended exit strategy.

This case demonstrates the importance of looking beyond headline bridging terms when arranging finance for high-net-worth borrowers. The term, exit strategy and structure of the facility can all be important considerations alongside the cost of borrowing. In this instance, access to a broader lender market enabled Enness to source a structure that matched the clients’ requirements.

If you require bridging finance to purchase a new property before selling your existing home, Enness can explore residential bridging finance options based on your circumstances and intended exit. Speak to a mortgage specialist to discuss your requirements.

Important: Regulated bridging finance is short-term borrowing and requires a credible and achievable repayment or exit strategy. Where repayment depends on the sale of a property, delays, changes in market conditions or changes in property values may affect the anticipated exit and the overall cost of borrowing. The rate referenced in this case study relates to a specific transaction and is not indicative of current or future pricing.