Our client, a self-employed limited company director, ventured into some personal property development. He approached Private Finance, pursuing the opportunity to purchase and refurbish a fire-damaged property. Despite not owning his own personal residence, he did have experience as a landlord.
The main challenge faced by our client was securing the necessary funding to purchase and renovate a fire-damaged property within a tight timeframe. There was substantial damage which meant that traditional lenders would not deem the property suitable as a security.
Traditional financing routes were not feasible, especially considering the urgent need for a significant sum to cover both the purchase price and the repair works. The goal was not only to repair but to enhance the property’s value significantly.
Our tailored solution involved securing a bridging loan, a flexible financing solution ideal for short-term requirements. This loan covered a substantial portion of the purchase price and 100% of the renovation costs. What made this option particularly suited to our client’s needs was its structure: a 12-month fixed rate with no monthly payments and no early repayment charges with interest that rolls over, thus minimising initial out-of-pocket expenses during the critical renovation phase.
Considering the client’s experience as a landlord and the project’s strong potential for profit, we made a persuasive pitch to the lender. We highlighted the refurbishment’s viability and the expected returns, giving the lender confidence in the investment’s security and the client’s proven track record in property management, as well as a detailed plan for the project’s completion.
Additionally, facing concerns about the property’s end value from the lender, we engaged with the valuer to examine the potential sale price post-renovation, ensuring it reflected the market’s demands and the quality of the refurbishment.
The bridging loan facilitated the acquisition and complete renovation of the property within the crucial timeframe, avoiding market delays that could potentially increase costs or compromise the project’s viability. Most importantly, it allowed the use of the property in its current condition to be used as security.
Our solution benefited our client by:
This case study exemplifies how bridging finance can be a powerful tool in property development, especially under constraints that might deter traditional financing routes. Each investment scenario demands a nuanced understanding of both the market and the available financial solutions to ensure both profitability and feasibility.
If this scenario resonates with you or you’re seeking personalised mortgage advice for another situation, please get in touch — we’d be happy to see how we can help. Call us on 0800 980 8777 or email info@privatefinance.co.uk.
Disclaimer:
The information presented in our case studies is intended for illustrative and marketing purposes only. Some case studies may be based on multiple enquiries or hypothetical scenarios to demonstrate typical processes or outcomes. Not all case studies represent completed business transactions, and the inclusion of a case study does not imply that the business was successfully concluded.
