Client circumstances:
Our client was a limited company who urgently required £2.6m to purchase a commercial property. Currently solely commercial, the client intended to convert the upper portion of the property into multiple residential units, which required planning permission. With this not yet granted, securing finance to fund both the purchase and the works could have been lengthy. This prompted them to focus on acquiring the building first. Knowing our ability to move at speed, the client’s broker turned to us to ensure they did not miss out on this business opportunity.
MT Finance solution:
The client had already exchanged contracts with the seller and set a completion date of the following month which gave us a clear deadline to aim for. After working quickly to instruct a valuation, as well as issuing the checklist of requirements and all legals, we were able to release a 1st charge bridging loan of £2.6m as per the client’s deadline. The loan-to-value was 65% of the property’s £4m vacant possession value and interest was retained at 0.89% over a 12-month term. As is standard with all of our bridging loans, there were no early repayment charges and the client won’t face any financial penalties if they exit their loan before the end of the term.
The benefits:
Our ability to move quickly meant that the client had the finance they needed to purchase the property and add to their portfolio. The 12-month term will provide them with enough time to submit – and get approved – a planning application to convert the upper floors into residential units. As soon as this is granted, they will look to refinance out of our bridging loan onto a development facility. Alternatively, if planning permission is denied, the client will be able to keep the building in its current format and secure a long-term commercial BTL mortgage. If either of these options happen before the end of their term, then they will not face any financial penalties or early repayment charges.