Re-bridge of a HMO to allow further time to finish works before refinance at 0.6% pcm

Deal Structure

43% Loan To Value

Interest Rate 0.6% per month, with interest retained

2% Arrangement Fee

No exit fee

12 months term.

Deal Summary

Our client had purchased a residential property fairly recently, and took out a bridging loan to assist with the purchase. Just after ownership, and after works had commenced, he decided that to truly maximise value from the project, he would apply for planning consent for a loft-conversion, to create an 8 bed HMO.

This was an experienced landlord, who already owns a couple of HMO properties and had previous experience or refurbishments and conversions. The slight delay which the planning application caused did impact on the contractor’s programme of works more than anything, and so the contractor had to be re-scheduled whilst the planning decision was awaited.

Once planning was granted, the contractor was booked in to come back and re-start works. That delay meant the initial bridging loan didn’t allow sufficient time to conclude works. As the initial lender didn’t want to extend for more than a month (their policy didn’t allow), a re-bridge to another lender made more sense.

At a rate of 0.6% per month, it was actually more competitive that the initial Bridging Finance.