Government update on right to rent

Using a bridging loan to save a buy to let purchase

Summary of the case

  • Buy to let purchase arranged by another broker had its offer within drawn days before it was due to complete.
  • The client needed the funds within 8 working days from their initial call to us or they risked losing tenants that had already been secured.

What we achieved

  • Arranged a bridging loan to save a property purchase
  • Secured funds in 5 working days from application
  • Retained the tenants and their move-in date

The challenges of the case

The client involved in this case came to us in the middle of purchasing a residential rental property. Mid-way through the process, their buy to let mortgage offer was withdrawn.

To add further complexity to the client’s circumstances, they had tenants lined up to move into the property, who would effectively be homeless if the deal did not go through.

The client called us on a Monday and had tenants lined up to move in on the following Thursday, so they had to complete on that day or before.

The previous broker had washed their hands of the case and was unwilling to help the client any further.

Our job was to get a solution in place for the client, fast.

A very fast bridging loan solution

With timing exceptionally tight, the route we identified for the client was to secure a bridging loan and exit to a buy to let mortgage.

When we approached the bridging loan lender our advisor was clear, from the get-go, on the deadline.

In this instance, the client had already had the property valued and had had legal work done. However, the valuation had been conducted by a firm that were not on the lenders panel. As a result, a new valuation still had to be undertaken.

The advisor at Commercial Trust raised the case with the Business Development Manager at the lender, to ensure it was top of the priority list.

Getting the deal paid out in 5 working days

At the point of application, the case passed to one of the account management team at Commercial Trust. This team is fundamental to the smooth sailing of any deal through to pay out. Our account managers act as the client’s representative with the lender, solicitor and any other third party involved in completing the deal.

The relationship between our account manager, the client and their solicitor helped drive the deal to the deadline. As lender requests came in, they would immediately be passed to the client, who in turn and within about 20 minutes, would reply. The lender got responses almost immediately, which helped drive the case through at a fast pace.

The high level of trust from the client also played a big part, with the client copying in the account manager on all correspondence with their solicitor to ensure everything moved like clockwork.

The end result was that the deal paid out within just 5 working days of the application going in, and the day before the tenants were due to move in.

Get in touch today to discuss your bridging loan requirements.

Bridging loan need-to-knows

Bridging loans are known for paying out more quickly than mortgages, which typically have a turnaround time of between 8-12 weeks. Whilst bridging loans typically have a higher rate of interest than a mortgage, when speed is off the essence they are a great solution and will usually only run for a number of months before being repaid.

You should never enter into a bridging loan without a robust exit plan, but we can work with you on this and can help you if you are:

  • Selling the property
  • Exiting to a buy to let mortgage
  • Exiting to a commercial mortgage

If you need exit finance in the form of a buy to let or commercial mortgage, we will always arrange this at the same time as the bridging loan, so you have a clear and confirmed route to paying off the bridge.

Top tips to get a bridging loan in place quickly

If you are in a similar position, with time constraints upon you, send us your details or call us and we will do our utmost to help.

What is also important is that you select a specialist solicitor, who understands specialist property finance.

As with any subject as huge as English law, solicitors each have their specialism. You may have a  solicitor who has helped your family with a range of legal matters, but, that practitioner may not have the required experience in property. Having to then familiarise themselves will slow the process down and may increase the hours they spend on the case which could have an impact on the bill you receive for the work.

Your advisor at Commercial Trust can recommend a solicitor to you, and ensure they are on the recommended lender’s panel.