August 9, 2021
Matthew Fairy

Second charge drawdown bridging facility against £4million commercial portfolio

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Key facts:

  • Second charge Overdraft facility
  • Client: Private UK developer
  • Mixed commercial use site in Kent
  • Property value: £4,000,000
  • Loan amount: £1,200,000
  • 24 months rolled up interest
  • Interest rate – 0.2% Per month for unused funds & 0.8% for drawn funds

Bridging finance is a lesser–known segment of the mortgage market but offers fantastic solutions to a whole range of financing scenarios. These short-term loans can be turned around in a matter of days, so are an excellent means to raise funds fast.  

In this case, our client already had an ongoing project on his hands but was offered this new site which he just couldn’t turn down. Within his portfolio, he was holding a row of commercial units in Kent which had planning for 38 flats and 1 commercial with an existing mortgage that he wasn’t ready to redeem yet as the project was not due to commence until for Q4 of 2022. With the need to raise the funds quickly to secure the deal, the usual underwriting process and mortgage application would have taken far too long with a private mortgage lender or standard lender. In any case it did not suit the borrower to enter into another traditional mortgage deal because of the planned redevelopment.

Additionally, not only did our client require the funds to secure the site, but further capital was also needed to assist with professional fees along the way.

Transparent Mortgage Services knew a drawn down bridging facility would be an ideal solution in this case and was able to secure the full amount of the loan at very competitive rates. The facility allowed our client to be able to repay and redraw funds as required providing the further flexibility and cost savings, similar to that provided by a clearing bank overdraft with interest only charged on the balance outstanding at any time.

The interest on the loan was rolled-up and didn’t need to be repaid until the end of the term along with the loan – this feature further helped with the client’s cash flow.  

Using our expertise and connections, we had created a quick and painless transaction, which was perfectly suited to the individual circumstances at hand.

If you are currently looking at raising short term capital against commercial property, and feel you would benefit from further advice, we would be delighted to assist you.