In August 2012, a UK property development company borrowed £1,000,000 from a mainstream lender to purchase a mews house in Fulham, West London and convert it into two new flats. The company had 12 months to repay the loan within which time it expected to convert, fully refurbish and sell the properties. After 10 months, the flats were completed, valued together at £1,750,000 and placed on the market with an estate agent for sale.
Unfortunately, by July 2013 the loan was nearing its termination date but the agent had not yet received any offers that met the company’s asking price for either property. In order to avoid accepting a lower offer or be subject to penalties/ increased interest rates on the outstanding bank debt, the company looked to obtain a new short term financing facility.
West One was approached by the company’s broker looking to source a suitable bridging facility as quickly as possible. Based on the usual application forms and the speed at which we were able to value the properties at and carry out all relevant due diligence, we were able to act fast and efficiently. By August, West One lent the borrower £1,150,000, secured against the two properties, for a period of 9 months at a rate of 0.99% per month. The loan provided funds to repay the existing lender and provided interest for the full term of the new loan. Some monies were also left over to dress the properties in order to assist the sales process.
The company was able to repay the initial loan and had sufficient time to sell the properties at an acceptable price.