Case study: semi-commercial bridging completed in three working days
A lender pulled out of a semi-commercial purchase in North London late in the process. The case went to a new lender, the existing valuation was re-typed, and it completed three working days after the enquiry.
The deal at a glance
| Detail | |
|---|---|
| Property | Semi-commercial building: an office and five flats, North London |
| Loan | Just over £600,000 |
| Day-one advance | The lower of 90% of the purchase price or 75% of the value |
| Rate | 0.89% a month |
| Interest | Serviced (paid monthly) |
| Term | 12 months |
| Early repayment | Two months’ minimum interest; no early repayment charge after that |
| Enquiry to completion | Three working days |
The problem: a lender pulled out
The client was buying a semi-commercial building in North London: an office and five flats. A valuation had already been done and the purchase was moving towards completion when the original lender withdrew. With a completion date to meet, the client needed a new lender that could move in days, not weeks.
What happened next
- Day one: enquiry. The case came in with the valuation and the deal details, and was introduced to a second specialist lender with an appetite for semi-commercial property.
- Valuation re-typed. Instead of instructing a new valuation, the new lender accepted a retype of the existing report, re-addressed to them by the original valuer. That removed the slowest step in most bridging cases.
- Legal work. The solicitors completed the lender’s checks and the charge.
- Day three: completion. Funds were released and the purchase completed.
The terms
The day-one advance was the lower of 90% of the purchase price or 75% of the value, so a purchase below value reduced the cash the client needed to put in. The rate was 0.89% a month, about 10.7% a year, which works out at roughly £890 a month for each £100,000 borrowed, or about £5,340 a month on a loan of £600,000.
Interest was serviced, paid monthly, rather than retained. That keeps the gross loan smaller, so more of the advance goes towards the purchase. See retained vs rolled vs serviced interest.
The term was 12 months with a two-month minimum interest period and no early repayment charge after that. If the exit comes early, the client only pays for the months used, subject to the two-month minimum.
What made three days possible
- A valuation that could be re-typed. A retype needs the valuer to be on the new lender’s panel and the report to be recent. When it works, it saves days or weeks.
- A lender comfortable with semi-commercial property. Mixed-use buildings narrow the field; going straight to a lender that knows them avoids false starts.
- A case that had already been prepared. It had been through one lender already, with a valuation done for them, so the information the new lender needed was ready.
Lessons for investors
- Lenders do pull out. Ask early whether your valuation can be re-typed to another lender if needed.
- Check the minimum interest period as well as the rate, especially if you expect to exit early.
- Semi-commercial purchases use the non-residential stamp duty rates, with no 5% surcharge. See stamp duty on a second home for how the residential surcharge works.
- Plan the exit from day one: a sale, or a refinance onto a commercial or semi-commercial mortgage.
For what usually slows a bridge down, and what speeds it up, see fast bridging loans and how to get a bridging loan.
Frequently asked questions
Can a bridging loan complete in three days?
Yes, in the right circumstances. In this case the existing valuation was re-typed to the new lender and the case was already prepared, so it completed three working days after the enquiry. Most cases take two to four weeks.
What is a valuation retype?
A retype is when a valuer re-addresses an existing report to a different lender, so no new inspection is needed. The valuer must be acceptable to the new lender and the report recent.
What is semi-commercial bridging?
A bridging loan on a mixed-use property, such as a building with a shop or office on the ground floor and flats above.
What happens if a lender pulls out before completion?
You need a replacement lender quickly. Bridging lenders can often step in, and if the existing valuation can be re-typed, the time to complete can be much shorter.
Got a deal in front of you?
Get indicative bridging terms on your case in a few minutes, or tell us about it and a specialist will come back to you.
Related
All finance is subject to the lender's assessment, case by case. Criteria, loan amounts and terms vary by lender and change without notice. DasLend is an introducer only. We pass enquiries to specialist lenders and FCA-regulated firms; we do not lend, advise or arrange finance. All figures are illustrative, not a quote or an offer. Property used as security may be repossessed if you do not keep up repayments. This case is shown as an example only; terms on any other case depend on the property, the borrower and the lender’s assessment.