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Bridging loans have become a valuable financial tool in the world of property development, offering flexibility and speed that traditional financing options often lack. In this article, we will explore real-world success stories from BIG Property Finance, highlighting how bridging loans have been effectively utilised in property development projects. From quick acquisitions to refurbishments and beyond, these examples showcase the versatility and benefits of bridging finance.

1. Meeting Urgency with Efficiency: Bridging Loan Enables Rapid Refinance

In the fast-paced world of property transactions, timing is often of the essence. This rings particularly true in the case of an urgent bridging loan completed in 14 days from enquiry. The subject property was a large, detached residence in London valued at £1,800,000. Facing impending default due to an expired loan term, the client required swift action to repay an existing lender.

With the risk of default looming, immediate action was necessary to secure financing and avoid potential repercussions. In such critical circumstances, traditional lending avenues often fall short, necessitating unique solutions to meet tight deadlines.

Recognising the urgency of the situation, our team sprang into action to provide a bespoke bridging loan solution. The offered terms included a gross loan of £879,000, structured to swiftly repay the existing lender and alleviate the client’s immediate financial burden. Whilst a full valuation report would normally be required, due to the tight timescale we were able to leverage in-house resources, to conduct our own comprehensive valuation, streamlining the assessment process and expediting loan approval. Additionally, legal work was finalised in a mere 6 working days, a testament to our commitment to meeting client needs with speed and precision.

2. Renovation and Refurbishment Projects: Bridge Loan Facilitates Property Transformation

Our recent client identified an outdated 3-bed terrace in Birmingham with significant potential for conversion. In need of extensive internal refurbishment and redecoration, the property presented an opportunity for transformation into three modern apartments. However, traditional lenders were hesitant to finance the project due to the property’s condition.

With the flexibility of bridging finance, the investor successfully transformed the property into desirable residential units, achieving a substantial increase in property value and rental income. Following completion, the properties are now considered suitable security for Highstreet lenders and are also ready to be sold on the open market.

Whilst a term mortgage might penalise a borrower with early repayment fees and exit costs, bridging finance is intended to be repaid within a short time frame and so can be invaluable for these types of speedy development projects.

3. Unlocking Equity for Development Opportunities: Bridging Finance with staged drawdowns

A meticulously structured bridging loan on a partially completed development site in Warwickshire.

The development in question comprised three new-build houses in Warwickshire, with total build costs estimated at £850,000 and £300,000 already invested in the project. Leveraging the equity in existing properties, the developer secured a bridging loan to bridge the funding gap.

The bridging loan featured staged drawdowns, ensuring that funds were released at key milestones throughout the development process. This tailored approach aligned perfectly with the borrower’s timeline and project requirements. This loan also featured an ample 18-month term, providing the borrower with sufficient time to complete the project, market the properties, and secure sales or long-term financing. Ensuring a smooth transition from development to realisation.

Bridging Finance with staged drawdowns

4. Overcoming Limitations in Traditional Financing: Bridge Loan Provides Open-Minded Solution

The world of property development is often filled with challenges and unique opportunities. One such success story involves the purchase of a Grade II listed manor house in the green belt of Kidderminster, valued at £2.1 million, which was taken into receivership by the original vendor’s mortgage provider. Despite complications, a bridging loan facilitated the intricate purchase.

The subject property presented a compelling investment opportunity. However, its status under receivership and limited accessibility for viewings, posed significant obstacles. Despite being an experienced property professional, the buyer faced challenges in obtaining financing due to the property’s unique circumstances and the vendor’s lack of cooperation.

BIG Property Finance stepped in with a tailored bridging loan solution, providing the necessary funds to acquire the manor house. With a 12-month term, the borrower had the flexibility to secure financing for the property whilst using it as temporary accommodation for their business. With a track record of assisting social housing tenants and providing properties for the local authority, the borrower aimed to continue this work by utilising the manor house to address the increasing demand for housing in the area, through a contract with the local council.

These real-world success stories highlight the vital role of bridging loans in property development. From facilitating quick acquisitions to funding renovation projects and unlocking equity for new opportunities, bridging finance offers developers the flexibility and agility needed to succeed in today’s dynamic property market.