BRIDGING LOAN FOR SEMI-COMMERCIAL PROPERTY WITH A COMPLEX EXIT STRATEGY
In this Case Study, our client is looking to purchase a unique semi-commercial property in Harpenden, Hertfordshire, for £3.45m.
They intend to convert it into their main residence but don’t have the funds until their current home is sold. They are seeking a bridging loan of £3.55m to secure the purchase and cover the stamp duty.
However, the property’s semi-commercial status and lack of change of use permissions make it challenging to find suitable bridging lenders.
To address this issue, we would start by conducting thorough research to identify bridging lenders who are open to funding semi-commercial properties or are willing to consider applications that involve a change of use.
We will leverage our network and industry knowledge to find lenders who specialize in unique or non-standard cases.
Once we have identified potential lenders, we will carefully review their lending criteria and assess their willingness to fund the client’s specific scenario.
We will consider factors such as the loan-to-value ratio, interest rates, repayment terms, and any additional requirements or conditions.
We will then present the client with a shortlist of suitable bridging lenders who are likely to consider their application.
We will provide them with detailed information about each lender, including their lending criteria, terms, and any other relevant information. This will allow the client to make an informed decision about which lender to proceed with.
Throughout the process, we will work closely with the client to understand their needs and requirements, providing guidance and support. We will also assist with the application process, ensuring that all necessary documents and information are provided to the chosen lender.
By taking a proactive and tailored approach, we will strive to find a bridging loan solution that meets our client’s requirements and helps them secure the purchase of the unique property in Harpenden.
To address the added complexity in the valuation of the client’s current home, we will need to take certain steps. Here’s what we can do:
1. Research and identify lenders who have a more favourable approach to property valuations. This may involve reaching out to different lenders, reviewing their valuation processes, and understanding their panel of valuers.
2. Explore the possibility of using online valuations for the client’s property. We will check with lenders if they accept online valuations, as this can expedite the process and potentially provide a more favourable valuation.
3. Consider lenders who use a longer valuation period, such as 180 days. This might work better for higher-value assets that typically take longer to sell. We will assess lenders’ policies on valuation periods and select those that align with the client’s needs.
4. Approach alternative lenders. If the first lender’s valuation significantly impacts the Loan to Value ratio and voids the deal, we will search for other lenders who may have a different valuation approach and may provide a more favourable outcome.
5. Collaborate with the client’s real estate agent or seek the assistance of a professional valuer. They may be able to provide additional insights and guidance on how to present the property in the best possible light during the valuation process.
6. Review and adjust the client’s loan requirements, if necessary. Based on the valuation results, we may need to reassess the loan amount or seek alternative options to meet the client’s needs.
By taking these steps, we aim to navigate the complexities of property valuations and find a lender who can provide a more favourable valuation for the client’s current home, thereby ensuring the success of the bridging loan deal.
We were aware that the second lender we typically prefer for semi-commercial bridging loans would use a 180-day valuation, which might not accurately reflect the unique value of our client’s property.
In response, we decided to apply with a third lender known for using the open market value figure. The valuation returned at a precise £3.55 million, allowing the deal to move forward.
It’s important to note that you are not obligated to list your property at the valuation provided by your bridging lender. In this case, our client listed it at £3.95 million because their agent was confident in its ability to sell at that price.
Another complexity in this case was that the client’s current home was partially owned by their SIPP (Self-Invested Personal Pension). Although the client had the funds to buy it out, it required careful coordination and communication among the involved parties.
With the bridging loan secured, our client could proceed with the change of use application and move into their unique, once-in-a-lifetime property.
This case highlights our expertise in handling intricate bridging finance scenarios. From managing valuation discrepancies to addressing unique ownership structures, we have a wealth of experience in adapting to our client’s needs and finding effective solutions.