- 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 downsize 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 more suitable route to funding the new purchase while the existing property was prepared for sale.
The clients also required a longer term than is typically available through regulated bridging finance. Most regulated bridging facilities are structured for a maximum period of around 12 months, particularly where the proposed exit is the sale of the secured property. In addition, lenders will often require the property to be actively marketed for sale when the facility completes.
This did not suit the clients’ circumstances. They wanted sufficient time to sell their existing home when market conditions were most favourable rather than being forced to bring the property to market immediately. Several other brokers had presented options with expensive 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 us to approach lenders that could take a more flexible view of the proposed transaction.
Using our 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 valuable because it gave the clients greater control over when they sold their existing home. Rather than being pressured into accepting an offer simply to meet a short bridging deadline, they had additional time to assess market conditions and pursue a sale at a time that suited their circumstances.
This case demonstrates the importance of looking beyond headline bridging terms when arranging finance for high-net-worth borrowers. The cheapest or shortest facility is not necessarily the most appropriate solution; the term, exit strategy and flexibility of the structure can be equally important. In this instance, access to a broader lender market enabled Enness to secure a structure that better 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.
Risk Warning:
Bridging finance is short-term borrowing and carries risks. Borrowers should have a clear and realistic exit strategy and consider the total cost of borrowing before proceeding. Where repayment depends on the sale of a property, changes in market conditions or delays to the sale could affect the ability to repay the facility. Failure to meet the terms of the facility could result in enforcement action against the secured property.
Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal or tax advice. Finance is subject to status, underwriting, property assessment and lender criteria. Terms and availability will vary depending on individual circumstances and the proposed transaction.
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.
