AREA: North London
AMOUNT RAISED: £1.45m
PRODUCT USED: Bridging loan
In the competitive world of property development, timing and financial agility are often the keys to success. This case study showcases how Bridging Finance London helped an experienced developer overcome a challenging situation, turning a potential financial setback into a profitable venture.
Client Scenario
Our client, an experienced property developer operating through a UK Special Purpose Vehicle (SPV), had undertaken an ambitious project in North London. They had successfully converted an old factory with period features into four self-contained terraced houses.
However, they faced a critical issue:
- Their existing lender was poised to impose default interest rates of 2.5% per month
- The building control and warranty were not yet in place
- Full repayment was demanded by the current lender
With limited options available due to the incomplete paperwork, the developer was at risk of significant financial strain that could jeopardise the entire project.
Purpose of Facility: To pay off an existing lender before they started to impose default rates to the borrower at 2.5% per month.
Funding Solution
We stepped in with a comprehensive solution:
- We secured a new lender willing to take on the project despite the pending building control and warranty.
- A bridging loan of £1,450,000 was arranged as a re-bridge refinance and long-term loan stabilisation facility.
- The new facility paid off the existing lender, avoiding the punitive default rates.
- Additional capital was advanced to cover professional fees, ensuring all necessary paperwork could be completed.
- The bridging loan was secured at a rate of 0.79% per month, significantly lower than the impending default rate.
Final Outcome
The strategic refinancing not only resolved the immediate financial pressure but also paved the way for a successful project completion:
- All four terraced houses were successfully let out.
- We arranged four separate buy-to-let (BTL) mortgages against each property.
- The entire bridging facility was successfully exited.
- Long-term financing was secured at a rate of 5.3% per annum.
This case demonstrates the value of expert financial advice and access to a wide network of lenders. By understanding the client’s unique situation and acting swiftly, Bridging Finance London was able to:
- Prevent the client from incurring punitive interest rates
- Provide the necessary funds to complete all required paperwork
- Secure favourable short-term and long-term financing options
- Enable the successful completion and letting of the development project
For property developers facing similar challenges, this case highlights the importance of working with debt advisory experts who can provide tailored solutions and access to a diverse range of lending options.
