Richard Deacon, sales director at Masthaven Bank, provides a case study into successful bridging finance.
Martin Ball is a Home Counties based mortgage consultant with Knight Frank Finance, the residential and commercial mortgage consultancy.
With over 10 years’ experience, Martin knows a thing or two about securing property finance for his clients, but even for him, this particular case threw up some unusual challenges.
The property
The first challenge thrown up by this case came from the property itself. Martin explains: “I wouldn’t say the property was unique, but the eventual buyer will probably be looking for something quite specific. It has a large acreage and also features two barn-type structures. It had been the family home, but was also part-used as premises for the client’s business, with that section being owned by the business itself.” As an experienced property consultant, Martin knew that unusual properties can be more challenging to market and sell.
What’s more, from a financing point of view, the fact that any loan needed to cover both residential and commercial titles presented a further complication.
Further challenges
There were two owners of the property, both having independent legal representation. This meant that there were three solicitors involved – one for each of the owners and one for Masthaven.
The main driver for a bridging loan was to allow the owners to purchase separate residences. This necessitated the bridging loan being secured against three different properties. Martin says: “Both had found properties locally that they wanted to move forward with prior to selling their main residence. That’s why we went to Masthaven.”
The Masthaven approach
Martin contacted Masthaven to inquire about securing a bridging loan for his client and was immediately impressed: “Because the property was part commercial and part residential, other providers would have struggled to get their head around that type of lending. With Masthaven that wasn’t the case; they arranged for a commercial valuer to go out and look at the property and value it as a commercial entity as well as a residential home. They looked at the big picture, which certainly made things a hell of a lot easier for us all! Anyone looking at the property from a purely residential perspective wouldn’t necessarily have seen the value in the land and the property as it stands.
Ongoing flexibility
Masthaven’s client-focused outlook was highlighted when the clients unexpectedly received a down valuation on their existing property, which tipped them over into a higher loan to value bracket. Rather than insisting they pay significantly more for the loan, Masthaven took a pragmatic approach, as Martin explains: “Masthaven actually managed to create a bespoke product for the client to ensure that they weren’t paying over the odds because of the down valuation. They created a product that met us in the middle, which definitely softened the blow.”
A final twist
Despite the complexities of the case, things went smoothly until near the end of the transaction, when a further issue reared its head.
“When agreeing on this transaction part of the reason for doing it was that the clients needed to move quickly with their onward purchases,” says Martin. “But it transpired that one of the solicitors hadn’t been moving as quickly as the others because their client’s subsequent property purchase wasn’t as urgent.”
Fortunately, Masthaven were able to be flexible around this, allowing one client to draw part of the facility and go ahead with the purchase while holding the remaining funds ready for release to the other client once the slower purchase was ready to complete. Martin has no doubt that this saved the deal: “Masthaven’s last-minute flexibility and their ability to think on their feet allowed the transaction to complete. I’m fairly certain that if Masthaven hadn’t acted as they did then the deal wouldn’t have gone through.”
Three key lessons
- Flexibility is crucial: A flexible approach allowed the clients to receive the right service for them.
- The importance of being reactive: Circumstances can change quickly, and we’re ready to react when clients need us.
- There’s no substitute for personal service: Being available to support and update our clients can make all the difference.