Client circumstances:
Our client required £225,000 to purchase a residential property from a developer which was still halfway through construction. The home, which had a price of £575,000 and was undergoing a heavy refurb, still needed a substantial amount of work doing to it, meaning its current value was significantly less than its anticipated completed value.
As the client needed to borrow finances based on its completed value, they would not have been able to raise the desired amount via a high street lender. While they could have waited until the project was complete, this would have added at least three months to the process and may have resulted in them losing the property. Knowing how important it was to move quickly, the broker reached out to our regulated team.
MT Finance solution:
After receiving the application, we quickly commissioned a valuation of the property. This was conducted when the property was only half-built, resulting in an amount which was significantly lower than the client needed. In order to lend the full £225,000, we agreed to make a start on the legals and re-value the property only when the works were near completion. This final valuation took place on a Tuesday and a bridging loan was released the next day, once all legals were complete.
Our strong relationship with the valuer and solicitor enabled us to be extremely flexible with this case. This allowed us to release a first charge regulated bridging loan of £225,000 at 39.82% loan to value based on OMV with the term set at 12 months. There are no exit fees or early repayment charges.
The benefits:
By re-valuing the property at the last possible moment, we were able to issue a regulated bridging loan for the full £225,000. It was the flexibility of everyone involved with this case that ensured the client didn’t lose out on the property, thus providing them with a new home. Once the building works are 100% complete, the client will refinance their home with a standard residential mortgage. The 12-month term of their bridging loan provides them with ample time to do this.