Bridging Loan and Refinance Arranged for Large Self Build

At Clifton, we have the unique ability to provide both bridging loan advice, and advice on the subsequent refinance if you're exiting via a mortgage.

This means we can significantly speed up the process for you - saving you time and hassle in explaining your situation to multiple brokers and lenders - and can provide the reassurance that your longer-term financial plans are water-tight and in safe hands.

The Scenario

We were recently approached by a husband and wife who had self-funded the development of a stunning new family home in Milton Keynes.

But with the project nearing completion they were short on funds, needing an estimated £200k to finish the development while maintaining the high standards of work on the property.

While they had originally planned to remortgage the home once built, it still required fairly significant internal work throughout, and was currently still deemed as 'unmortgageable' in the eyes of traditional mortgage lenders.

So, they'd explored the option of a bridging loan, and came to us for help.

The Solution

We advised that a bridging loan would provide the perfect stopgap to see the project through to completion before refinancing.

With the property currently valued at £1m, they could comfortably raise £225k (£200k for planned work, and a £25k surplus as a contingency) against the home at a very competitive interest rate, to be refinanced with a mortgage when complete.

Having never used bridging finance before, the clients were initially anxious about the process - particularly as they had funded the entire development with their own funds up to this point.

Our broker took the time to go through the process step-by-step in thorough detail, including the costs, potential risks, repayment terms, and more, to aid in their understanding of the process and help them feel comfortable.

Additionally, a senior member of our residential mortgage team was able to step in and provide reassurance that the remortgage to repay the bridging loan would be a straightforward case, and presented a sound exit plan.

Additional challenges:

As with most bridging loan cases, there were a few hurdles along the way for our broker to navigate:

• The clients wanted to remove the husband from the title of the property to strengthen their remortgaging position. While this was their decision, we needed to ensure that the client had received independent legal advice (ILA) on the implications of this and keep a close eye on the administration involved.

• They were also working to a deadline - with contractors scheduled to start internal works and requiring payment - so we needed to act fast.

By chasing through the deal with solicitors and the business development managers at the bank, we managed to complete this case from start to finish in just 63 days for the client - an exceptional turnaround, especially when factoring in the ILA requirement.

The client also has the peace of mind knowing that when the work is complete, they can get back in touch for a seamless transition into long-term financing with their mortgage application ready to submit.