Buy to Let Case Study
- 17 October 2021
- Posted by: Editor
- Categories: buy to let, case study
We were approached by a client early this year that bought a dilapidated residential property at auction and needed a commercial bridge to complete within 28-days. Although the flat was purchased at £95,000 plus £6,000 of auction fees, the property only valued-up at £80,000 in its original decayed state, which presented the client with extremely tight cashflow issues for the completion and refurbishment.
Our initial response was to ask the client to obtain a post refurbishment valuation from a local independent agent, to get a professional opinion on the value once the works were completed which enabled us to get a snapshot of exit strategies and options available.
Although the decayed property only valued at £80,000, the Gross Development Value (GDV) was estimated to be £160,000 and a potential rental income of £850-900 pcm.
This allowed us to make tentative enquiries with suitable lenders and establish a range of options that would fit with the client’s financial needs and timescale. Following a series of conversations with the client and lenders we secured a formal offer of a 12-month, 1st charge, Non-Regulated commercial bridging facility for £79,000 which incredibly equated to 99% of the dilapidated condition, open market value and 49% of the Gross Development Value.
The facility was made-up of £41,450 net on day 1, with a further £25,000 net available towards refurbishments once the purchase completed and works were started. The bridge was arranged on a rolled-up interest and fees basis, so the client had nothing to pay monthly, leaving the client with the maximum cashflow for the project refurbishment.
We are pleased to relay the client is now coming to the end of the refurbishment on the property and redeeming the bridging loan. The flat has since valued at considerably more than the estimated GDV and they have instructed and engaged us to obtain a long-term commercial buy to let mortgage to exit the commercial bridge and add the refurbished property to their rental portfolio.
Bridging Finance to break that chain…
Need a bridge until you can sell your current home, or simply release funds for another project…
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Helping you choose the right bridging finance for your home move or investment property
Buy to Let Case Study 17 October 2021 Posted by: Editor Categories: buy to let, Case study No Comments We were approached by a client early this year that bought a dilapidated residential property at auction and needed a commercial bridge to complete within 28-days. Although the flat was purchased at £95,000 plus £6,000 of17 October 2021
Find the right bridging finance at Lumi Bridging Solutions.
Contact us today for all your buy to let bridging finance, buy to let mortgage, commercial mortgage, bridging loan for house purchase, HMO purchase, emergency cashflow loans, auction finance, bridging loans for property development, bridging loan mortgage, business bridging loan, commercial development financing.
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LUMI BRIDGING SOLUTIONS IS A TRADING NAME OF FEINGOLD FINANCIAL SERVICES LIMITED
Company registration number 05087823. FCA registration number 303451. Data protection registration number Z8766562
Registered office: Europa House, Barcroft Street, Bury, BL9 5BT.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE SECURED AGAINST IT.