There were two issues: there was a tight timescale for completion (being an auction purchase), and the deposit funds were tied up in other properties within an existing portfolio.

We sourced an Agreement in Principle from a bridging lender to provide 100% of the value of the property, plus 100% of the £30,000 conversion costs.

This was based on the security being a first charge over the property being purchased, plus a second charge over one of the other investment properties that was already 64% geared.

This lender’s criteria required the applicant to already own investment property that is no more than 80% geared.

A bridging loan was agreed for a 12-month term, with a 2% lender fee, interest at 1.45% per month (compounded and rolled up), and a £150 exit fee.

As the conversion needed planning permission, the lender agreed to retain the £30,000 for renovation works until that permission was granted. 

A generous 12-month term gives the client time to secure planning permission for conversion, carry out the works and look for a term mortgage once let. 

Attributed to Samantha Williamson, Business Development Manager at Positive Commercial Finance.