Recently, we were approached by a business introducer who was trying to raise funds for an experienced Scottish property developer who, in turn, was struggling to find a competitive short-term finance deal so that he could realise a lucrative build development project.

The developer had already purchased the land and had also been given the green light in terms of planning permission, yet he found himself unable to obtain the additional (and not insignificant) funds needed to finance the building itself.

Owing to the vast scale of the project and the high loan-to-cost ratio, many bridging lenders were unwilling to consider the application, especially as an existing bridging loan, which was used to purchase the land, was nearing the redemption stage.

This meant that the developer faced the highly probabilistic reality of having to sell the land to a competitor in order to honour his existing financial commitments.

The initial request was for a finance package that was to be rolled out in three stages. However, we decided that it would be better to restructure the application so that every aspect of the development funding was combined into a single package.

In order to make the prospect more appealing to our exclusive panel of investors, our team devised a new application that focused on the number of off-plan flats that had already been sold, the level of interest shown by other prospective buyers, and the borrower’s high level of commitment and existing investment in the project.

We also took steps to show how the costs would reduce as the various stages of the build were completed.

Our efforts paid off, and within just two weeks, we managed to secure a loan amount of £6.21 million, which meant that the project could go ahead without any delay or further complications.

The investor we sourced for our client offered a revolving facility for the full £6.21 million amount, which was approximately 65% to 70% of the gross development value. This covered the full cost of the initial construction phase, which delivered 48 high-quality luxury flats within the first 10 months.

The interest charges and administrative fees were subsequently rolled up and added to the overall cost of the loan.

As the build progressed, the developer had the option of refinancing the original deal in order to take advantage of a cheaper rate once the first stage of development was complete.

Any finances owed to the lender are paid back by means of pre-sales and completed sales, and these funds are then made available to the borrower again in order to finance the end stages of the project.

“When most other bridging specialists were telling me my borrowing options were practically non-existent, UK Property Finance defied my negative expectations and found an appropriate funding solution that was fast, flexible, and realistically affordable. Although we still have another 8 months left before the project is complete, the end goal is now firmly in sight, and the remaining flats, many of which we have already sold, are almost finished.” – Our satisfied property developer client has asked to remain anonymous.

We are glad to report that both the lender and the client are extremely happy with the solution that we devised!

To find out more about our services as a provider of unique bridging loan solutions, please use the contact form provided on this website. Alternatively, speak to us directly on 0116 402 7982.

The Association of Short-Term Lenders has just released a report that shows a sustained upward trend in the number of bridging loans issued in the last quarter.

In the period leading up to March 31, 2016, ASTL members provided their clients with over £2.7 billion in bridging finance products, and this amount is expected to increase again in the coming months. In terms of percentages, this represents a 16% rise in the amount borrowed compared to the period ending March 31, 2015.

According to Benson Hersch, ASTL chief executive, bridging finance is now a highly established niche product that is going from strength to strength, even though the economy itself is still a cause for concern for many business owners. The main reason for this is the high level of uncertainty following the results of the referendum in June, the effects of which have yet to be seen in the marketplace.

To quote Mr Hersch, “As applications begin to pick up over the next quarter, despite some negative factors, the need for bridging finance is likely to continue to grow, and our members are well-placed to take advantage of opportunities.”

As an added boost to the bridging loan industry, the actual value of bridging loan applications has also increased from the previous year by just over a fifth. However, the overall value of the loan book has experienced a small dip of around 4% when looking at annual trends. This provides a good indication that the loans themselves are being paid off at a higher rate.

With more and more banks and other high-street lenders tightening up their borrowing requirements, it seems that bridging loans are gaining serious ground as a genuine way forward for those in search of short-term finance as a means of providing growth.

Unlike traditional mortgage products and most other loan types, bridging finance is much more flexible and widely available. Bridging loans can even be sourced for clients who have experienced bad credit problems and for those who are unable to provide proof of income.

UK Property Finance has today completed one of its largest bridging loans to date. The multi-million-pound funding was required to purchase a large repossessed new-built office block complex in the centre of a major UK city. Our client, a recently formed offshore limited company, had a successful bid for the property at auction some 2 weeks prior to our contact and managed to purchase it at less than 1/3 of the marketed asking price being requested prior to the property being repossessed.

Since paying the required 10% deposit, our client has come to realise that he had been strung along for 2 weeks by his long-term and previously trusted mortgage broker, who was unable to locate the balance of the funds needed to complete the purchase in the 28-day time frame required, despite being so confident at the beginning that he could do so. Our client now understood that he needed focused and specialist help to prevent a default on the purchase agreement, a possible loss of his deposit, and, more importantly, a loss of his bargain property.

A trusted family business acquaintance, bridgingloans.co.uk, had been recommended to our client due to our no-nonsense reputation of being open and honest at all times and always doing the utmost to do what we say. After an initial telephone conversation, we located a lender who agreed to supply the funds required for the purchase in the timeframe needed and at an excellent rate, which was much lower than what our client had been quoted previously and seen advertised elsewhere. We emailed the basics of the deal back to our client, including details of a substantial discount we had managed to negotiate in the arrangement fee, and as such, the client subsequently gave us the authority to act on his behalf.

To get the best possible rate, we advised the client to secure the purchase funds required against other owned property rather than the office complex. Our client had a large portfolio of prime central London residential investments, which would be more interesting to a wider range of lenders and would give us more choice and ability to negotiate the best possible deal with the lowest fees, etc. We secured a first charge on one property and a second charge on another.

We completed all the paperwork required to transact the case and emailed this to the client. Due to the tight time frame, the client immediately completed the paperwork, emailed it back, and on the same day, we forwarded this emailed paperwork to the lender, who at the same time instructed the valuations. As the reputation and standing of bridgingloans.co.uk are so strong, the lender was able to process the case through to offer by using the emailed documents only. The case was completed just in time, and although one issue occurred during processing, we used our high-level contacts within the lender organisation to ensure that the problem was quickly and efficiently dealt with.

We will be arranging the long-term commercial mortgage finance for the client so he can repay the bridging finance as required, and also because of the performance of our team at UK Property Finance, we have been asked to look at two more bridging loan projects for the client.