Linkedin-in
rapid bridging logo 2 tone
Contact us

Post Auction Purchase

Mr and Mrs are a couple living in Stoke-on-Trent. Mr is self-employed and owns a pest control business, and Mrs is retired with a state pension.

Start an application
Learn more

Need help? Talk to our experts.

Bridging Loan Case Study – Post Auction Purchase

Area: Stoke-on-Trent
Capital Raised: £210k

Client Background

Mr and Mrs are a couple living in Stoke-on-Trent. Mr is self-employed and owns a pest control business, and Mrs is retired with a state pension. After moving out of their previous residence, the couple lived with the family and sought a bridging loan to facilitate their next property purchase.

 

The Scenario

The clients successfully bid for a new property at an auction of £237,000. They required a net loan of £210,000, secured against the newly acquired property and their previous residence, valued at £460,000. Their goal was to move closer to family, as Mrs felt isolated in their prior location. Since they had already exchanged contracts, they needed to complete the purchase to avoid losing their deposit.

The Challenges

The primary challenge was securing financing within a tight three-week timeframe. Initially, they had applied for a buy-to-let mortgage with The Mortgage Works (TMW) through a broker. However, their application was declined because their previous property was adjacent to a commercial storage facility, which TMW deemed unsuitable for lending. This left them with limited options and an urgent need for funding fast…

The Solution

To address their financial needs, a Fast Track Bridging Loan was arranged. The key terms of the loan included:

  • Loan Amount: £210,000
  • Term: 12 months
  • Loan-to-Value (LTV): 33.71%
  • Exit Strategy: Sale
  • Security: First charge
  • Interest Roll-up: No monthly payments; interest added to the loan
  • Leander and Legals Fees: Added to the loan

The clients chose a Fast Track Fixed-Rate Bridging Loan to ensure predictable costs. They planned to repay the loan by selling their previous residence, with a secondary option of securing an older life mortgage or a buy-to-let mortgage if necessary.

Implementation Process

The loan application process was expedited due to the urgent nature of the transaction. The following steps were taken:

  • Initial Consultation: A thorough financial fact-finding was conducted.
  • Loan Structuring: Various repayment strategies were discussed, and the fixed-rate bridging loan was chosen.
  • Valuation & Underwriting: The lender’s valuation and underwriting were swiftly arranged to confirm the property value and loan security.
  • Legal & Documentation: Legal checks were expedited, and necessary paperwork, including property titles and financial disclosures, was completed.
  • Loan Approval & Funding: The loan was approved, and funds were released to meet the auction deadline.

 

The Outcome

The bridging loan enabled the clients to purchase their new home on time. With no mortgage on their previous residence, they had ample equity to facilitate the loan repayment upon its sale. The couple successfully transitioned to their new home to be near family, achieving their goal of relocation. The bridging loan provided them financial flexibility and security, ensuring a smooth property transaction despite initial hurdles.

Conclusion:

This case study highlights the effectiveness of bridging finance in overcoming time-sensitive property transactions. The clients ‘ case demonstrates how a well-structured loan and a clear repayment strategy can provide essential financial support when conventional mortgages are not an option within a tight deadline.