auction purchase in eight working days, TW3
Client circumstances:
Our client was a portfolio landlord who was looking to purchase a new residential property via auction. Having submitted the winning bid, a deposit had been made and they needed to raise a further Ā£292,500 within 28 days to secure the property. They had already approached a lender regarding a buy-to-let mortgage but this was not going to complete within the deadline. Urgently needing a short-term fix, their broker reached out to our bridging team.
MT Finance solution:
Our underwriting department received the application on 2nd May and they immediately got to work. The valuation report was instructed later that day and the report was received on the 5th. After a short delay caused by the client finding and appointing their solicitor ā€“ which also resulted in them requesting a four-day extension which was subsequently granted ā€“ we sent a checklist to their solicitors thereafter on the 10th with legals starting the day after when their solicitor confirmed they were holding monies on account to provide the costs undertaking. With this in place we completed a first charge bridging loan of Ā£292,500 on the 15th ā€“ as per the updated deadline. This was 65% loan-to-value of the propertyā€™s open market value of Ā£450,000. The term was set for 12 months.
The benefits:
Thanks to our ability to move at speed, we were able to issue a first charge bridging loan as per the clientā€™s extended deadline. This enabled them to complete the purchase without losing their deposit and add to their rental portfolio. They will now look to use a small portion of the funds to undertake a light refurbishment before exiting out of our bridging loan onto a buy-to-let mortgage at the propertyā€™s increased value. While the term of their bridging loan is set at 12 months, it is likely that they will exit much sooner than that due to the applicants already approaching the long term BTL lender whilst they were completion on the facility with MT Finance. The lack of exit fees or ERCs will allow them to do this without facing any financial penalties.
