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Purchasing a portfolio of 7 HMOs worth £1.8m

Bridging | 5 April 2022

A recent portfolio case we handled demonstrates the importance of working with an expert for your finance needs.

Our client wanted to use a bridge to obtain a portfolio with a market value of £1.8M but a purchase price of £1.45 million before refinancing onto a BTL mortgage to free up his capital, which is usually standard practice when buying under market value.

However, doing this meant the client would need to pay an additional fee, additional legal costs and an additional valuation when they came to refinance 6 months down the line. Adding tens of thousands in additional charges.

Thankfully, we advised them that there was another option.

Because the purchase price was within 20% of the market value we were able to secure the client 90% of the purchase price using Shawbrook’s portfolio product.

Had we gone down the bridging loan and then refinancing route we would only have been able to secure the client £1.37m, meaning he’d need to contribute an additional £168k deposit.

The numbers

  • Market Value – £1.8m
  • Purchase Price – £1.45m
  • LTV against market value – 72.5%
  • 3 year fixed rate – 4.29%
  • Product fee – 1.5%

Thanks to our advice we:

  • Secured more Day 1 funding, making his deposit contribution £168k lower.
  • Saved him from paying twice for fees, legal costs and valuations by avoiding a future refinance to realise the capital at the full market value

DO GET IN TOUCH IF GOING DOWN THIS ROUTE INTERESTS YOU BY EMAILING PAUL@PROPP.IO OR CALLING 01489 346788.

We can point you in the direction of some cracking auctions, negotiate the finance on your behalf and will be on hand to give you advice along the way.