£2.85m Bridging Loan to Buy High Acreage Home Before Selling Existing Property

Getting a bridging loan to fund a house purchase while waiting for an existing property to sell is one of the most common uses of bridging loans that we see day to day.

Bridging is often the perfect solution to secure a property purchase at a crucial time and can take the stress and costs out of the logistics of selling before buying.

In this bridging loan example, our broker went the extra mile to secure short term property finance for our clients on a complex case where most would have struggled.

The Scenario

Our clients were looking to upsize their family home and had identified a large country home with over 30 acres of land to purchase.

They’d put their current house on the market - a residential property with equestrian facilities - to fund their new purchase.

But, their existing home was proving difficult to sell, which meant they couldn’t make the right offer for the new home they’d fallen in love with.

So, they approached us to source a bridging loan that could secure their new house purchase and bridge the gap of waiting for their current place to sell.

Once their property sale was complete, they planned to use the proceeds to pay off a chunk of their bridging loan and secure a standard mortgage to make up the difference.

However, there were a few complications with their case:

• Bridging lenders and banks can have issues with equestrian facilities in a property because they can be used for commercial use and limit potential buyers (unless you own horses, you probably won’t want the facilities).
  
  
• Because of the value of their bridging loan, lenders wanted additional evidence that our clients would be able to source finance via a mortgage to exit their bridging loan once their property had sold. As their current property sale wouldn’t completely cover their purchase, they’d need a standard mortgage on top and would need to provide evidence to the bridging lender that they’d be accepted for a loan.

The Solution

We started by selecting a bridging lender that would be comfortable lending against a unique property – such as our clients’ home with equestrian facilities.

We also evidenced our ability to agree with a lender to secure the funds required to refinance after their property had sold.

On top of this, we also secured an agreement for a standard mortgage for our clients if their property sold before the bridging loan was in place and they needed to act quickly. We had all bases covered.

The bridging application was a success, and the quick turnaround of their loan allowed the clients to move quickly on their property and secure a discounted price, as they were in the same position as a cash buyer using the loan.

Refinancing our clients’ home with a longer-term mortgage

When the clients’ existing home did sell, we were ready with a mortgage application to immediately pay off their bridge loan and put long-term finance for their new property.

But this had its complications too...

• The clients were self-employed and ran their own IT company, so we needed to leverage both their salary income and their company’s net profit to reach the loan size they required.
  
  
• Their company was also growing year on year, and we had to ensure the mortgage lender was comfortable with how they operated.

Our broker took the extra steps to understand how the company operated and generated income to support its sustainability in the future.

We liaised with the lenders’ underwriters to understand their company in-depth, which ensured the provider was comfortable enough to refinance the bridging loan.

The finance we secured was a £1.6m, 2 year fixed rate mortgage at a rate of 1.24% - which we think is hard to beat considering the value and complexity of this case.