- Property: Prime residential property in Eaton Square, London
- Client: EU national living and working in Italy
- Property value: £3M
- Loan amount: £1.95M
- LTV: 65%
- Bridging term: Nine months
- Rate: 0.80% per month
Bridging finance can provide a short-term solution when a property purchase needs to complete before conventional long-term mortgage finance can be arranged. Enness was approached by an EU national living and working in Italy who was looking to purchase a prime residential property in Eaton Square, London, for use as a personal residence.
The property was valued at £3M, with the client requiring £1.95M of finance. This represented a 65% loan to value (LTV). The client intended to refinance the short-term borrowing onto a conventional mortgage once the necessary arrangements were in place.
The main challenge was the timing of the transaction. At the time, delays associated with the opening of a UK bank account were affecting the client’s ability to complete the purchase. As a result, there was a risk that the required completion deadline could not be met using a conventional mortgage application.
The client also intended to fund the deposit from an overseas bank account. This created an additional hurdle, as not all UK-regulated bridging lenders were able to accept overseas funds as the source of the deposit.
Enness therefore needed to identify a lender that could accommodate both the tight completion timeframe and the client’s overseas banking arrangements. Rather than allowing the delayed account opening to prevent the acquisition from proceeding, a short-term bridging facility provided a way to complete the purchase while giving the client time to arrange longer-term mortgage finance.
Following discussions with lenders, Enness identified a provider prepared to accept the overseas funds towards the deposit and complete within the required timeframe. A £1.95M bridging facility was arranged against the £3M property, representing 65% LTV.
The facility was structured over nine months at a rate of 0.80% per month. This gave the client sufficient time to resolve the UK banking arrangements and subsequently refinance the bridging loan onto a longer-term mortgage, subject to the relevant lender’s criteria at the time.
The transaction allowed the client to complete the purchase within the required timescale despite the difficulties surrounding UK account opening and the use of overseas funds for the deposit.
The case demonstrates how residential bridging loans can provide flexibility where conventional mortgage finance cannot be completed within the required timeframe. For international buyers, additional considerations such as overseas banking arrangements and the source of deposit funds can also influence which lenders are able to consider an application.
Enness works with specialist lenders on complex property transactions, including bridging finance for high-value residential property. The appropriate structure will depend on the borrower’s circumstances, property, available security, proposed exit strategy and lender criteria.
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, affordability, valuation, 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 longer-term finance. Borrowers should ensure that a realistic and achievable exit strategy is in place. Property values can fall as well as rise, and delays in refinancing or selling a property may result in additional interest and costs. Overseas currency movements may also affect the cost of funds where borrowing or deposits involve different currencies.
Information contained in our case studies is for market and illustrative purposes only. In some cases, these may be made up of multiple cases and are for illustrative purposes only.
Some case studies are made up of enquiries that have come into the business, not all business completes, and the posting of a case study does not represent a completed piece of business.
Property values can fall as well as rise, and you may not get back the amount originally invested. Property investments can be illiquid and may take time to sell. Where borrowing is used, your property may be repossessed if you do not keep up repayments on a mortgage or other loan secured against it.
