TAB structures £335,000 bridge on £1m London BTL property

TAB has provided a £335,000 bridging loan to a property investor, secured against a BTL property in London’s Dollis Hill.

The 24-month first-charge facility represented 33.5% LTV and enabled the borrower to raise capital against an existing property without refinancing the asset onto longer-term finance.

The borrower — an experienced property investor with eight rental properties — approached TAB to release equity following a court order requiring the payment of a substantial sum.

The court order followed an unsuccessful appeal against the London Borough of Barnet relating to an enforcement notice concerning another BTL property owned by the borrower.

That enforcement notice related to the property's previous use as three self-contained flats. The property has since been returned to use as a single residence.  The borrower was required to settle the outstanding amount under the resulting confiscation order.

While most of the facility was used to settle the outstanding liability, the borrower received a net £47,000 to support the maintenance of their wider BTL portfolio.

The £1m Dollis Hill property used as security for TAB's facility was unencumbered, allowing TAB to take a first legal charge at a conservative LTV with significant equity protection.

The 24-month facility gives the borrower time to manage their wider property portfolio to access the capital required to resolve the liability and refinance the bridging loan onto longer-term finance. The substantial equity remaining in the security property supports the proposed refinance exit.

Underwriting was carried out by one of TAB's senior underwriters, Justice Marima.

Calum Knight, TAB's BDM for southeastern England (pictured above), commented: “This is a great example of how a bridging loan can provide a borrower with access to capital held in an unencumbered property when they need to resolve a time-sensitive financial liability.

“The property provided substantial security for the £335,000 bridge, with the resulting 33.5% LTV giving us a strong lending position.

“The 24-month term also gives the borrower the time and flexibility needed to manage the wider portfolio and refinance. And, of course, the breach was unrelated to our security property.”

Robert Hershaw, founder and managing director of Active Investments, who introduced the loan, said: “Our client needed to raise capital against an existing BTL property to settle a court-ordered liability, while retaining enough funds to continue managing their wider portfolio.

“TAB was able to structure the facility against the £1m property at a low LTV, providing the capital required to resolve the immediate issue while leaving the client with £47,000 in net funds.

“The 24-month term also provides useful flexibility while they arrange the longer-term refinance.”