Client circumstances:
Our clients had previously taken out a first charge bridging loan with another regulated lender but they were coming to the end of their term with no means of repaying it. They were also facing additional interest fees of around £20,000 if they were late with their repayments. In order to settle the outstanding balance, they were urgently needed another bridging loan which would repay the existing lender as well as providing the clients with enough capital to undertake a light refurb of their two security properties. These properties would then be sold on the open market.
In total, the clients required a short-term fix of £1,225,250. With the deadline looming, their broker immediately contacted our regulated team.
MT Finance solution:
As an asset-based lender, we focused on the quality of the clients’ security properties which were two apartments in a highly desirable area of west London. This enabled us to issue a first charge regulated bridging loan of £1,225,250 at 65% loan-to-value of the OMV. The term was set at 12 months. As the clients were ‘asset rich but cash poor,’ they were struggling to cover all the legal fees, so we worked closely with their broker to make these more manageable. We also agreed to reduce the cost of undertaking. Instead of this being paid by the clients – which is standard practice – the broker covered the cost.
This flexibility on both our part and the broker’s enabled us to not only meet the clients’ deadline, but also provide them with an affordable bridging loan.
The benefits:
Our regulated bridging loan enabled the clients to repay their existing loan without incurring any additional interest. They will then use the remaining funds to undertake a light refurb of their two apartments before putting them on the open market at a higher value. The money accrued from the sale of these apartments will allow them to exit our regulated bridging loan. If the sales are completed before the 12-months, they will be able to repay our bridging loan without facing any exit fees or early repayment charges.