On this pageLondon chain break avoided with £1m bridging loan The challenges of securing the loan for this particular case How was the Â£1m bridging loan used to preserve the property chain The benefits of using a bridging loan for property chains in London Financial advice from experts on bridging loans in London
When it comes to buying your next property, one of the most important parts of the process is having the right financing in place at the right time. Properties in Knightsbridge don't often come onto the market but when they do, they sell fast, and the opportunity to acquire them is time-sensitive.
This was exactly the issue a couple in London recently faced when they were in a challenging situation, as the buyer of one of their investment properties in Greater London was taking longer than expected to arrange their finance, putting the couple's potential purchase in jeopardy. They needed a £1 million bridge loan quickly to prevent the chain from collapsing.
The couple trying to secure £1m in bridging finance to secure a property in London
The professional pair were architects and had a requirement to be located in the centre of London for 3 days a week whilst fulfilling client projects. Being from London originally, they also had family in the local area. By being closer to the three client projects they were juggling and their family, the couple could strike a better work-life balance, spending the remaining 4 days of their week at their main residence back in Surrey.
Architects tend to have exacting design requirements when it comes to property. Still, this couple knew their time constraints wouldn't allow for indulgent remodelling, so instead, they decided to focus on securing a recently refurbished property to avoid creating yet another project for themselves. Almost all apartments in Knightsbridge that were on the market were presented immaculately, and finding a suitable property wasn't difficult. However time was always seemingly against the couple, with properties being sold before they even made it to being marketed. Out of the 1741 apartments sold in Kensington and Chelsea in 2022, only 1229 we in old buildings and of that, only 79 were in the client's desired price bracket of £1.5 million to £1.75 million.
The key requirements were a period building, spacious reception area, contemporary kitchen, master bedroom with en-suite bathroom and a further guest double bedroom with en-suite. Working closely with a couple of leading estate agents who had a high profile in the area paid off as the pair were able to source one that was ideal within just 6 weeks - but they needed to complete quickly to secure it.
The problem in this instance was that the funds for the apartment purchase were originally intended to be from the sale of one investment property in Greater London. However, as the buyer of that property had complications in their chain, his financing was likely to be delayed. Confident that it was a genuine delay, the couple sought the advice of their IFA. In the highly competitive world of property, one misstep can derail an entire chain of transactions, causing losses of time and money for all parties involved. They needed a 3 month finance solution to cover the gap between buying their next property and selling an existing one.
This is where the bridging finance came into play. They contacted their IFA and explained what they wanted to do. The IFA approached us and we set about raising the funds from the couple's other investment properties. The purchase price was £1.6 million and the couple had enough cash for the stamp duty, legal fees and a further £600k for the purchase itself but had a shortfall of just over £1 million. The exit was to be the sale of one of the couple's three investment properties, which was expected to complete within the next 3 months. The bridge was secured against two of the couple's other property investments in Greater London as they didn't want, or need to, secure it against their main residence.
Out of the average 6 apartments each month that are sold in Kensington and Chelsea (Data source: HM Land Registry), this was one they didn't want to miss out on. Unfortunately, as with many property sales in central London, there was not an insignificant amount of competition for this apartment. However, the fact the couple were able to position themselves as cash buyers helped the seller choose them as their preferred buyer. The finance was arranged within 6 working days and the couple exchanged and completed within 2 months.
This temporary financing option allowed them to complete the purchase of their apartment before waiting for the sale to complete on another investment property. Their determination and resourcefulness paid off, enabling them to strike the perfect work-life balance.
By utilising bridging finance worth £1m quickly provided to them by a private family office, they were able to save their property chain just in time! With a bridging loan in place, the entire process could continue without a hitch, allowing all parties to achieve their desired outcomes. It's clear that in the world of property transactions, a bridging loan can be an incredibly valuable tool for preserving the chain and ensuring success for all involved.
When it comes to buying and selling properties in London, it's not uncommon to encounter hurdles along the way. One of the most frustrating obstacles can be property chains, where the sale of one property is reliant on the successful sale of another. Bridging loans are the original financial tool that solves this problem. It was designed specifically for this scenario. It's a flexible financing option that can help keep the cogs turning in your property chain. With the ability to be secured against both residential and commercial property, bridging loans can offer fast access to funding, without the need for lengthy applications and credit checks. Plus, because the loan is typically short-term, repayment can be made in full as soon as the chain is complete. For those looking to avoid missed opportunities and delays, a bridging loan could be just the solution.
If you're considering using bridging finance in London, it's worthwhile speaking to an expert broker. Bridging loans can be a great way to bridge the gap between buying a new property and selling your current one, but they can also be complex and costly if you don't know what you're doing. That's why it's crucial to seek advice from financial advisors who are familiar with bridging loans and who can guide you through the process. With their help, you can avoid potential pitfalls and make sure you're getting the best possible deal. So whether you're a seasoned property investor or a first-time buyer, don't go it alone when it comes to bridging loans. Seek out the advice of experts and set yourself up for success.