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Bridging Loan To Finance An Investment Property In Scotland

£910K Scotland

Our client’s prosperous investment was fully realised when we found a suitable lender for their complex business plan – with bridge finance, they got their development dream off the ground.

The Scenario

The clients were looking to purchase a farmhouse in Scotland at £1.3m, offering plenty of land and various outbuildings for their development project.

They aimed to repurpose the farmhouse and begin the construction of holiday let lodges on the land purchased - they had several goals in mind;

  • They wished for separate titles on each of the three properties: the farmhouse, outbuildings, and land.
  • They would refurbish and renovate the farmhouse; as a buy-to-let (BTL)
  • The various outbuildings would also go under the same treatment as BTL properties.
  • Lastly, they planned to construct a holiday park - beginning with a series of holiday let lodges on the land.

Despite a robust plan, the experienced developers struggled to secure a lender willing to approve their business plan – a majority of bridging lenders may refuse propositions based on several issues, mainly ones that influence the risk to a lender.

Additionally, the project involved Scottish property, which can hinder plans as fewer lenders are available due to a differing legal system and added complications. 

Between the split titles, the planning permissions and a complicated exit strategy, this case presented a real challenge to any broker – as it stood, it was an unattractive proposition for lenders. 

The Solution

The solution came with bridging finance - a short-term bridging loan would finance the initial purchase while giving our clients ample time to split the titles and begin the necessary work on the BTL properties. 

We were able to secure a 70% LTV (Loan-to-Value) at £901K, spanning a 12-month term, with the ability to “roll-up” interest – this enabled our clients to free up cash flow for planning, renovation and refurbishment costs.

Ultimately, the main asset would be secured while they implement their plan. Then, they could refurbish the properties and obtain the planning permission to begin construction of the holiday lodges.

Additionally, we advised that the initial bridging loan could be later refinanced on a title-by-title basis, as follows:

  • They could refinance the farmhouse and outbuildings into separate BTL mortgages once converted.
  • Despite not including the third title of the land with planning permission, the broker was confident that a new valuation and refinance would be sufficient to repay the bridging loan.
  • They could then raise development finance from the unencumbered land to fund the construction of their holiday business once the bridging loan was repaid from the two BTL mortgages.

Our access to suitable lenders and are packaging of a specific case can significantly affect its attractiveness to a lender – an established relationship with lenders, and a reputation within the industry, provides a certain level of trust. As a result, we can secure a deal that, otherwise, may be incredibly challenging to secure without specialist help.

In this case, we secured bridging finance for investment property quickly and reasonably priced. Our clients got their development dream financed without delay when they approached the right specialist broker.

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