Property Purchase Dorset with State Pension

Client Background

The retired carpenter client sought financial assistance to facilitate a next-time property purchase. He has built substantial wealth over his lifetime, with assets including his unencumbered primary residence, valued at £565,000, and his unencumbered investment property, worth £425,000.

The Scenario

The client required a bridging loan of £275,000 to purchase a new home priced at £500,000.

The Challenges

Several obstacles complicated the client financing:

• Income Constraints: His only income source was his state pension, making traditional lending difficult.
• Urgent Purchase Timeline: The property purchase required fast funding, also ruling out conventional mortgage applications.
• Property Sale Dependency: His repayment strategy relied on selling his investment property, which was currently vacant and awaiting sale.
• High Moving Costs: Legal fees, moving expenses, and property transition costs added to his financial burden.

The Solution

A Fast Track Fixed Bridging Loan was arranged with the following terms:

• Loan Amount: £275,000
• Term: 12 months
• Interest Roll-Up: No monthly payments are required; interest added to the loan
• Lender & Legal Fees: Added to the Loan
• Legals – Dual Representation Legals
• Exit Strategy: Sale of investment property and primary residence if necessary

Implementation Process

The loan application was processed efficiently to meet the client’s purchase deadline. The key steps included:

• Financial Assessment: A detailed financial review was conducted.
• Loan Structuring: Risk discussions and alternative exit strategies were evaluated.
• Property Valuation & Underwriting: The investment property and new home were valued to confirm feasibility.
• Legal Documentation: All necessary legal agreements and lender approvals were completed.
• Loan Disbursement: The loan was approved and released in time for the property purchase.

The Outcome

• Successful Property Purchase: The bridging loan enabled the client to complete the transaction as planned.
• Property Sale in Progress: The investment property was listed for sale and expected to repay the loan within the 12-month period.
• Financial Stability: The fixed interest rate provided cost certainty, avoiding unexpected financial burdens.