Skybridge Lending funds 100% auction purchase using dual security structure

Skybridge Lending has completed a bridging loan enabling a borrower to fund the entire purchase price of a residential property acquired at auction by utilising additional third-party security.

The lender, which has been active since 2018, provides first- and second-charge bridging loans against residential investment property, commercial property and land.

The borrower secured a two-bedroom semi-detached property at auction for £150,000 but required funding to complete within the auction deadline.

Rather than contributing additional capital, the borrower offered a second residential property as additional security, allowing Skybridge to structure funding for the full purchase price.

Recognising both the time-sensitive nature of auction transactions and the strength of the proposed security package, Skybridge structured a six-month bridging facility with a clear exit via refinance.

In this case, the borrower required funding for the full purchase price, which was made possible by offering an additional residential property as second-charge security.

Although consent for the additional second charge had been requested, it had not been received in time to meet the auction completion deadline.

Following completion, consent was received and the second charge was subsequently perfected in line with the agreed security structure.

Skybridge provided the bridging loan over a six-month term at a reduced interest rate of 1.5% per month.

To assist cash flow, the first three months’ interest was retained within the facility, with the remaining three months serviced monthly at £2,434.34.

An exit fee equivalent to one month’s interest was added to the gross facility and becomes payable upon redemption.

The agreed exit is through the refinance of the auction property onto a conventional mortgage.

The refinance is being arranged by the introducing mortgage adviser, allowing the borrower to replace the bridging facility with longer-term finance once the purchase had completed.

Jessica Musk, manager at Skybridge Lending, commented: “Auction purchases often require lenders to think creatively while maintaining robust risk management.

“In this case, the borrower required funding for the full purchase price, which we were able to achieve by structuring additional third-party security.

“Despite formal consent for the second charge not being available before the auction deadline, we worked closely with the legal teams to complete using a UN1 restriction before perfecting the second charge once consent was received.

“It demonstrates how specialist lenders can provide pragmatic solutions to help borrowers meet challenging deadlines without compromising the integrity of the security package.”