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Property Development Bridge Loan Solves Funding Issue for New Build

£90k Stevenage

In some cases, running out of funds can cause property development to be stalled - this was precisely the position our clients faced with his new build project months into development.

The Scenario

We were approached by our clients after they had already been through a long process of rejections, and not getting what they were after. This had lasted approximately five months, and our clients were losing hope on funding the build of their dream property. 

They had been working with another broker, who had had some difficulty in getting them the loan they needed – which was £90k. The issue was that, for some lenders, this amount was below the minimum, and did not fit the lender’s criteria.

The situation was this:

  • They had underestimated the potential costs of the long development project they were undertaking, and funds had run dry in the middle of construction.
  • The half-built property was located in Stevenage and was valued at £600k. They had also had a projected GDV (Gross Development Value) of £800k – which would be the potential value when the property was finally built. 
  • They knew they would need a bridge loan in order to complete the development, yet they couldn’t get a successful application through to lenders.

As a result, our clients were stuck. In the past five months, they had already tried unsuccessfully to secure a loan for an unfinished development project - which would require high costs to complete. 

When development is complete, our client's exit strategy would be through the equity release of the property - since the GDV of the finished build would be £800k, our clients could sufficiently pay back a bridge loan within the deadline. However, despite this, they were unsuccessful over the past five months in trying to get approved for the loan they needed. 

Time was not on their side, as difficulties had presented themselves during the application of such a loan - with the size of the loan they needed, and the construction of the property, presented as a problem for select lenders.

The Solution

Thankfully, in coming to us, we were able to help them through the process and secure them a suitable lender, and a bridge loan tailored to their needs. Here’s what we did for them:

  • Our broker found the right lender, where the previous one had not. This lender was offering favourable rates and the loan size they needed in order to fund the final stages of development on the new build.
  • We secured a bridge of £90k at 0.84% interest per month for our clients.
  • The bridge would span a term of 12 months – allowing our clients the necessary time to repay the loan, which would be through equity release when the development was complete and the build finished. 
  • Additionally, during the process, we recommended a great solicitor to employ, which greatly sped up the entire application.
  • After months of wasted time, and unsuccessful attempts they had dealt with previously - we managed to secure the loan needed within only 2 months.

We helped them navigate the bridge loan process, recommended a solicitor, and ultimately secured their loan when they felt it had been impossible to do given the previous five months.

With our help, they were able to finish development and get the release equity to pay back the loan amount within the term time comfortably.

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