Bridging deals of the week

Bridging deals of the week

This week, B&C highlights the details of two recently completed deals by Manchester-based bridging lender Bridgebank Capital… .

This week, B&C highlights the details of two recently completed deals by Manchester-based bridging lender Bridgebank Capital

1. Purchase under value

A builder who already had a number of investment properties was keen to expand his portfolio so contacted Bridgebank Capital for funding.

The coal board was disposing of its assets, and as a result the builder was able to buy the properties for just 60 per cent of their market value.

He was also prepared to spend around £5,000 on each property which would add £10,000 to £15,000 to the final value.

Given the large discount, Bridgebank were happy to lend 95 per cent of the purchase price net of all the bridging costs. Once the works had been completed the client remortgaged all four properties on buy to let mortgages, effectively recouping the majority of his original deposit and renovation costs.

The flexibility provided by the bridging loan enabled the client to increase his portfolio from two to six properties for a relatively small cash deposit, leaving him with sufficient resources to look for new deals.

2. Quick refinance to secure a premise at discount

Bridgebank was asked by an experienced broker to help a developer in South Wales that had seen the opportunity to buy a commercial property at a discounted price because the current owner was experiencing financial difficulties.

The developer already occupied premises on the same site as the property and needed to expand his working space, but the owner did not want to part with the property.

However, the bank holding the charge on the property advised the owner that it was a case of him selling or them taking possession – this meant selling at whatever price they could get.

It became obvious that the two parties would not come to an agreement and the developer was at risk of losing this ideal property because the bank would put it to the open market.

The bank told the developer that the only way he could succeed was to provide evidence by way of an offer of funds that he was in a position to purchase.

Bridgebank was also made aware that the bank would want the funds as quickly as possible. This caused a problem because the owner was reluctant to allow access to the premises for valuation purposes.

Despite this Bridgebank was able to take a view on the value, in consultation with the developer and a local valuer, and subsequently issued an offer subject to valuation prior to drawdown.

When the purchase was nearing completion, Bridgebank was able to instruct the valuation as soon as access was possible. Because due diligence had been carried out in full prior to the valuation, solicitors were in a position to confirm that £146,000 of funds at 60 per cent LTV would be forthcoming, allowing the developer to complete without delay.

The broker was more than satisfied and the developer was in a position to carry out his expansion.


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