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Overcoming Valuation Challenges for a Large Semi-Commercial Bridging Loan

£2.55 million Somerset

Purchasing high-value properties can come with complications, especially regarding valuations. This particular case shows the importance of experienced property finance brokers such as us, at Bridging Loans Direct, as we’re able to adapt and provide flexible options.

The Scenario

Our client wanted to buy an exceptional semi-commercial building in Bath to convert into his residence. The property was previously used as a conference venue and was listed at £2.5 million.

Not yet having the cash from the sale of his current home, the client sought a £2.55 million bridging loan to cover the purchase and associated taxes. He planned to repay after selling his uniquely designed house, which he expected would sell for over £2.5 million.

Here's the Issue:

As a semi-commercial building lacking residential approval, over 70% of regular bridging lenders wouldn't work for this application.

Additionally, bridging loan companies perform their own property valuations for security assets. These can be unpredictable and create issues:

  • Each lender uses different valuation panels leading to inconsistencies
  • Some permit faster online valuations, while others require physical inspections
  • Certain lenders only consider forced-sale value within 180 days, which can undervalue unique properties needing longer marketing periods

In this case, the first lender’s valuation for our client’s current residence returned almost £650k lower than expected at £1.85 million - making the loan untenable.

The Solution

Knowing the second lender we considered would likely use the lower 180-day valuation methodology, we chose a third option that assessed full market value. Their figure matched the target at approximately £2.5 million allowing the deal to proceed.

Note: the client still placed his property for sale at a higher £2.8 million based on his agent's confidence.

Additionally, part ownership of the home by our client's SIPP [self-invested personal pension] demanded close communication between all parties. Bridging Loans Direct, was there every step of the way to see it through.

Finally, with the bridging finance secured on flexible terms, the client could seek approval to convert the exceptional building into an extraordinary residential property.

This case demonstrates our broker’s skill at navigating intricate financing situations including convoluted valuations and distinctive ownership structures. At Bridging Loans Direct, we always meet client needs and secure the best possible bridging loan solution - take a look at our full guide to bridging loans, for more information. 

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