Client circumstances:
Clients needed £104,000 to purchase a residential investment property, which they planned to eventually refurbish and put on the rental market to generate some extra income.
The clients had approached their mortgage lender but were turned down because the sellers had someone currently residing in the property and vacant possession wasn’t swiftly obtainable. The clients were also planning to use £70,000 gifted from their parents, which only complicated their circumstances further.
The clients needed to act fast in order to benefit from the stamp duty relief. So, the client’s broker approached MT Finance to see how we could help.
MT Finance solution:
We are able to accept gifted contributions on purchases and immediately began the loan process, whilst our clients focused their efforts on procuring vacant possession for the property.
We had everything lined up ready for the client and when the property became vacant, we released a £104,000 bridging loan at 48% LTV of the £215,000 open market value. Interest was retained at 0.74%, over a 12-month term.
The benefits:
By taking out the bridging loan, the applicants were given the time and breathing space to purchase the investment property subject to vacant possession, benefiting from the stamp duty relief.
What’s more, the 12-month term will allow them to carry out their desired refurbishment works and secure a buy-to-let mortgage against the property’s higher value. When they’re ready to refinance the property and pay back the loan, they can do this without incurring any early exit or repayment penalties.