Short Term Finance from Private Bank Secures £1.6m Colchester Home at Low Interest Rate

The Scenario

Our client was looking to upgrade their family home to a £1.6m large residential property in Colchester.

But having found the perfect property for their family, they couldn’t afford to wait until their current home sold to make the purchase, or they’d risk losing out to another buyer - and they didn’t have the cash on hand to buy outright.

To avoid losing the property, they came to us for a short-term property finance solution.

The Solution

This type of case is perfect for a bridging loan, and it’s a common scenario that we see on a day-to-day basis: buying a house before selling your current property.

More and more people are using bridging loans as a short-term finance tool to bridge the gap between buying and selling – it's a surefire way to secure the home you have your hopes set on while leaving plenty of time for the sale of your current property to go through.

Our client had £800k of readily available funds for the purchase, so they needed a bridging loan of £800k to reach £1.6m.

They had a £290k mortgage still outstanding on their current property, valued at £1.3m, and they would sell this before the end of their bridging term to repay the loan comfortably while leaving them with £200k cash left over.

Private Bank Connection – Better Interest Rates for High Net Worth Clients

This client owned a successful estate agency and earned a salary of £300k per year. This qualified him as a High Net Worth Individual, making him eligible for private lending from selected private banks.

While a standard bridging loan would have cost our client over 4% in interest over his 12-month term, the private bank we used was able to offer the same loan with an interest rate under 3% as well as the option to repay monthly and accompanied by the highest quality of service.

Usually, bridging loans can only be repaid as a lump sum. Still, the private lender we used was able to run an affordability test against our clients’ high income to justify their monthly repayment of interest (essentially an interest-only mortgage affordability check).

The flexibility and customisation of private lending are often its main attraction. While you can achieve lower interest rates, bigger loans, and lower deposit requirements from private banks, our clients often find that the elite level of service and the flexibility of finance options set this type of finance apart from the rest and adds the most value.

Please read our full guide to High Net Worth property finance.