3 Bridging Loan Examples Brokers Can Show Their Clients

Posted by Apex Bridging on 27th January 2022 -

Bridging finance can be a difficult concept to explain to clients. Offering bridging loan examples is a great way to illustrate how this type of financing could benefit your clients and help them to achieve their goals.

The team of friendly experts at Apex Bridging have enabled hundreds of individuals and companies to realise their property ambitions. We work with top brokers throughout the UK for whom we have become the go-to bridging finance lender. In this blog, we’ll take a closer look at three bridging loan examples from our client success stories you can share with clients to help them understand the possibilities bridging finance opens up. But first, let’s take a brief overview of some frequently asked questions and how you can provide your clients with simple, easy-to-understand answers.

Common Client Questions about Bridging Loans

Question: What is a bridging loan and how does it work?
Answer: A bridging loan is a short-term financing option that allows people to purchase or renovate a property when traditional funding is unavailable. Loan amounts are calculated on a loan-to-value basis (LTV) and are typically repaid in four — 12 months.

Question: Who can get a bridging loan?
Answer: Anyone who has the necessary equity to secure the loan and who has a clear exit strategy.

Question: How much do bridging loans cost?
Answer: Apex Bridging typically lends between £100k and £2m. There are no monthly payments. Interest will be deducted for each month of lending and added to the final repayment amount. Clients need to pay survey and legal fees in addition to a 2% facility fee.

Question: What are the advantages of a bridging loan?
Answer: Fast access to substantial funds when traditional lenders cannot approve a loan.

Question: How fast can you get a bridging loan?
Answer: We can give brokers a quick decision as soon as we have the client’s information. Once a formal offer has been made and accepted, funds are released in as little as seven days.

Find out more information to share with your clients by visiting our FAQ menu page and navigating to the relevant question page.

Bridging Loan Examples

Example One: Purchase and Refurbishment of a Buy-To-Let Property

The clients were established buy-to-let investors who committed to purchase a large residential terraced property under auction. The property was sold with vacant possession and the plan was to refurbish the building, before adding the house to the books and renting it out at a profitable rate. The client wanted to reserve their own funds of £30,000 for the refurbishment and borrow capital to complete the sale.

Time was of the essence as the clients needed to turn the property around quickly to put it on the rental market and start earning an income. They also required the maximum LTV (Loan To Value) available to raise enough cash to buy the property.

The clients’ broker had a long-standing relationship with Apex and so quickly secured an offer in principle at 85% LTV — a gross amount of £467,500 against a value of £550,000. As a result, the clients could complete the renovation work and repay their bridging loan within the agreed 6-month repayment terms. At the point of refinancing and exit, the property was valued at £680,000, providing the client with a return on investment at 6.25% over the six months.

Example Two: 1.1m to Purchase and Refurbish a Semi-Commercial Investment

The client purchased a commercial property containing six flats and a trading coffee shop. The building was on title for £1,100.000 but the “On Market Value” was estimated at £1,510,000. We lent the client 80% of the On Market Value, which equated to the full purchase price of £1,100,000.

The property was completely refurbished. Each one-bedroom flat was converted into a two-bedroom flat and the lease on the shop was extended. As a result, the On Market Value had more than doubled to £2,300,000 within six months. The client refinanced on a long-term basis to repay the bridging loan, allowing him to use the equity to fund a new property development project.

Example Three: To Purchase a Property When Traditional Funding Is Unavailable

The reason many clients come to us is they cannot secure funding via traditional routes. This client approached Apex Bridging for help to fund the purchase of a dilapidated property that needed a complete refurbishment to achieve a habitable condition. The client was not eligible for a buy-to-let mortgage.

We provided a loan of £540,000 at 75% LTV, enabling the client to purchase and refurbish this investment property. Once the property was restored to a habitable condition, the client refinanced the property on a buy-to-let mortgage. Our loan provided a short-term bridge between the purchase of the property and its renovation to a standard that made traditional funding options accessible.

Final Thoughts

Many consumers are unaware of bridging loans and the benefits they offer. Brokers play a vital role in explaining the value of this type of financing and putting clients in touch with a reliable finance provider.

Apex Bridging is the go-to lender for hundreds of brokers across the UK. See what our clients have to say about working with us on our testimonials page. Arrange a no-obligation consultation today or contact us to speak to one of our friendly team of experts.