After carrying out a thorough fact find of the client’s situation and identifying their attitude and appetite to risk, a large bridging loan was the identified solution that would meet the clients needs as this would enable him to purchase the new property without having to sell his existing property at the same time. The funding would also be arranged much quicker than a conventional mortgage. He could then complete the sale of his existing property at his own leisure, safe in the knowledge that he had secured the purchase of his new home.
Once the existing home is sold, he could repay most of the bridging loan. However, to further complicate matters, the sale proceeds would not be enough so the client also needed a Lombard loan from a private bank to make up the shortfall. This is a loan secured against other assets, in this case stocks and shares. Not all lenders like them because they are more complex than straightforward mortgages secured against property.
Numerous lenders were sourced but we needed a bespoke bridging lender who would consider lending the full £1mour client needed for his purchase, as well as two exit strategies because of the Lombard loan.
Key requirements: –
• A lender who would lend the full £1m required to purchase the new property via a bridging loan. • A lender who would allow the portion of the bridging loan that would not be repaid from the proceeds of the sale of the property to be covered with a Lombard loan secured against stocks and shares. • A lender offering a competitive rate, who would agree to add the fee to the loan.
After sourcing the specialist bridging market, we identified a lender who would agree to lend the full amount requested on an interest-only basis at 5.16 per cent fixed for one year. We also secured a Lombard loan at 75 per cent of the £1m investment at a rate of 0.9 per cent.
The application process: To support the loan application, the client provided evidence of income and details of the stocks and shares that the Lombard loan were to be secured against. He also provided evidence of his identity. We were delighted to inform him that a bridging lender had issued a formal loan offer for the full amount requested at a competitive rate.
• Total value of two properties borrowed against: £2m • Loan amount: £1m • LTV: 50% • Bridging rate: 5.16% per annum rolled-up interest and fixed for one year • Lender product fee: £20,800,added to the loan • Monthly payment:£0 (£1m still owed at the end of the term, in addition to £56,158 in interest)