A classic bridge is not so straightforward

UTWhat began as a fairly straightforward bridging loan application became somewhat more complicated as underwriting revealed several issues affecting the properties offered as security.

Our borrowers wished to purchase a larger family home closer to their children’s secondary school. The house was in a sought after area and several other parties were interested in buying the property. As such, our borrowers didn’t have the luxury of time in which to sell their existing home before purchasing and so with the help of their broker, decided that a classic bridge would be their best option.

With a purchase price of circa £3.7m, the customer needed a bridging facility of £2.45m to complete the transaction. Their existing home was valued at £1.85m and had an outstanding mortgage of £650k secured against it. UTB agreed to provide the facility by taking a second charge on the existing family home and a first charge on the new property being purchased. The broker was able to provide sufficient evidence of the borrowers’ ability to repay the bridging facility. This was to be intended to be achieved through a combination of the sale of the existing family home, a £750k mortgage raised on their new home with the balance of around £500k raised through refinancing their lowly-geared buy-to-let portfolio.

To this point, everything was progressing as planned. However, during underwriting various legal issues arose. We needed to deal with queries relating

to both security properties involving partly unregistered land, inadequate rights of access and a lack of planning consent. Each of these issues presented unique challenges which could not have been reasonably foreseen at the outset and which needed to be overcome before the bridging loan could be completed. The Bridging team worked closely with the Bank’s solicitors and valuers to understand and address each of them within a tight timescale.

With the Bank happy that both properties provided acceptable security for the £2.45m facility, the loan was drawn down, the purchase completed and the family began making plans to move to their new home.

Loan facility: £2.45m

LTV: 55%