Case Study – Bridge Loan Completed, Saving Our Client Loss Of Exchanged Funds

By Kevin Duffin on Jul 23, 2020

We recently had a situation where a client had been introduced to Mesa Financial to get their purchase through to completion. The introducer was one of the national developers we currently work with and they were worried that the client had not sorted their finances in time for legal completion.

As with all transactions this one didn’t turn out as we first anticipated.

The first thing we had to do was speak to the client, run through their predicament including work scenario,other UK assets, the situation with regards to the purchase and fully understand the client’s picture. One of the big sticking points in this transaction was due to the fact a large amount of the deposit funds was coming from China. Which causes a huge issue for lenders, solicitors and brokers when trying to show source of wealth.

With limited time before lenders closed for the Christmas break, and the developer threatening to rescind the contract if nothing sizeable had happened there was a very short time scale imposed for this completion to happen. The client had already gone past their agreed completion date.

After an initial discussion with the client to clarify the position, we had the valuation instructed the same day. By keeping the developer fully updated, we were able to keep their completions team informed with detailed explanations and time frames to completion.

The situation we presented the client was a bridge loan, for 9 months to complete the purchase, with the structure looking like the following:

Purchase Price - £786,000
Valuation - £750,000
Loan - £560,000 (75% of the Valuation)
Exit – Refinance

The added challenge we had, was the client had to use a separate set of solicitors for the advice on the transaction as their primary firm had 1 SRA partner who had undertaken the conveyancing. At this point we introduced our client to a solicitor we have a close relationship with who was able to sign off the lender’s legal requirements within a week a picking up the case.

So the 3 sets of lawyers, the lender and the developer all pulled out the stops, we managed to save the clients deposit and he is now furnishing the property ahead of his tenant moving in at the end of this month.

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