Bridging Loan to Complete £2.3m Self Build Under Tight Deadline

Bridging loans can provide crucial flexibility for homeowners caught between construction deadlines and mortgage offer expirations, especially for high-value properties with ongoing works.

The Scenario

Our clients approached us with a time-sensitive situation involving their new-build residential property in Hertfordshire.

They had been funding the construction primarily through a self-build mortgage, but those funds had been exhausted. The property was a detached 6-bedroom house of standard construction, with a current value of £3,000,000 and a projected Gross Development Value (GDV) of £3,500,000 upon completion.

And although it was now wind and watertight, it still required significant work to make it mortgageable.

So, they turned to bridging finance to finalise the works and transition to a standard residential mortgage upon completion. This new mortgage could then cover both the first charge (self-build) and second charge (bridge) loan.

The Solution

Understanding the urgency and complexity of the situation, we moved swiftly to source a lender capable of meeting our clients' needs. We approached approximately five regulated lenders who consider second charges, focusing on banks that handle higher value properties and are comfortable with ongoing works when there's a clear exit strategy.

Ultimately we settled on the product with the most flexible terms and the lowest rate:

• 70% Loan-to-Value (LTV)
• Competetive interest rate
• Interest rolled up to be repaid at the term end

We also had extensive experience dealing with the lender in question, allowing us to move the case forward efficiently, with our broker chasing lenders, valuers, and solicitors daily to ensure rapid progress.

Challenges Overcome:

• Tight Timeline: Completion was required within just two calendar weeks to keep contractors on site and prevent the new mortgage offer from expiring.
• High-Value Property: The £3 million valuation limited the pool of potential lenders.
• Ongoing Works: Finding a lender comfortable with the level of ongoing works at this LTV was also a challenge.
• Maximum LTV Second Charge: The clients needed to push the limits of how much they could borrow.

Without a bridging loan, the client’s mortgage offer could have expired and they could have faced long-term increased costs; contractors walking off-site, and prolonged rental periods in the meantime.