Our clients wanted to purchase a new property for £1.5 million even though they had not sold their existing property. High street mortgage lenders were ruled out due to the age of one of the applicants and due to the lack of provable income. The clients also wanted a flexible loan facility with no penalties which they could draw down in tranches. One tranche was to be drawn down initially to pay their vendor a previously agreed sum to enable the vendor to purchase her new property and the second tranche was to be drawn down 6 months later to complete their purchase.
Private Finance quickly sourced a private bank who were able to offer the required funds via a flexible ‘overdraft facility’ secured against the existing unencumbered residential property. This facility could be drawn down in tranches as required and also be redeemed without penalty once the clients had sold their existing property.
Although essentially a flexible bridging loan facility, the private bank provided a perfect lending solution for the clients because the loan was offered at a fraction of the cost of a standard bridging loan. The rate offered was only 3% over Bank of England Bank Rate, giving a payment rate of 3.5% (APR 4.0%* - the overall cost for comparison), with a 1% arrangement as opposed to the typical rate of 1.25% per month (15% per annum) and 2% lender fee charged by many of the standard bridging loan companies.
The client paid £15,000 arrangement fee (1% of the £1.5 million loan facility).
*APR (the overall cost for comparison) calculation based on a 5 year term, interest only mortgage with £15,000 arrangement fee, legal and valuation fees of £5,000. The actual rate available will depend on your circumstances. Ask for a personalised illustration.