Semi-commercial Bridge Loan Against A Hard Deadline

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Key Facts:

• Client: Norwegian National, UK Resident
• Property type: Semi-commercial property
• Property value: £2,450,000
• Loan: £1,530,000
• LTV: 70%
• Interest rate: 0.9% per month, fixed 6-month term
• Repayment: Interest-only

In this case, we were approached by a client looking to finance a semi-commercial multi-unit property in London that was for sale at auction. The client was a Norwegian national who was resident in the UK. The buyer had a very tight deadline for arranging finance, and they approached us to help to ensure they could get the best deal and secure a loan in the timeframe needed.

Financing property being sold at auction usually takes place in two parts. The first part will be used to purchase the property after winning the bid. This is usually done using auction finance, which is a kind of bridge loan, and was the best option for the client in this scenario. However, auction finance tends to be more expensive than conventional property finance, so borrowers need to refinance to get more competitive rates and a long-term loan.

The property in question was down valued before the auction, which meant that getting finance for the amount the client needed – £1,530,000 – was challenging. It’s not uncommon for properties being sold at auction to be down valued, and they will often be good investments regardless of this, but it will make it more difficult to access the finance required to complete the purchase, as in this case.

We identified a lender that was able to offer auction finance for the amount the client needed. To do this, we had to carefully lay out the client’s plans, negotiate and offer additional security on behalf of the borrower in order to give the lender more comfort. By doing this we successfully secured a 0.9% PCM rate for a 6-month term, giving the client enough time to source a long-term financing solution before they had to repay the auction finance.