Case Study · United Kingdom

Developer uses a bridge loan to complete the purchase of another property

26 March 2021

Developer uses a bridge loan to complete the purchase of another property

A developer was in a bit of a pickle. They had found their dream property, but with the sale of their current property still underway, they were short on funds to complete the purchase. With time running out, they reached out to Rikvin Capital for help.Rikvin Capital quickly sprang into action, conducting their due diligence on the property in question and performing a valuation. Before long, the legal agreements were drafted and the money was disbursed within a remarkable 7 days. This provided the developer with the much-needed funds to complete the purchase of their dream property. Once the sale of the developer’s original property was completed and the funds returned, Rikvin Capital released the charge on the property, closing this chapter of the developer’s journey. With the help of Rikvin Capital, the developer was able to make their dream a reality and move forward with their plans.

Problem

  • A developer, in the midst of selling his property, needed funds urgently to complete the purchase of another property.

Solution

  • Rikvin Capital was approached by the developer to provide financing until the sale could be completed.
  • After completing our due diligence on the property, Rikvin Capital conducted a valuation, had legal agreements drafted and money disbursed within 7 days.
  • Once the sale was completed and funds returned, the charge on the property was released.

Related: Read about when Rikvin Capital extended a loan for the redevelopment of a mail delivery office in London

  • Location: London, United Kingdom
  • Market Value: £11,850,000
  • Loan Amount: £2,900,000
  • Loan-to-Value: 25%
  • Duration of Loan: 6 Months
  • Payment Schedule: Monthly Interest Payment
  • Asset Type: Student Housing
  • Completion Time: 7 Days

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FAQ

I need to complete a purchase before my existing property sells. Can a bridge loan close the gap?

Yes. The London case here lent £2.9 million against £11.85 million of student accommodation (25% loan-to-value) in 7 days, letting the developer complete a new acquisition while the sale of an existing property was still in progress. Once the existing sale completed, the bridge was repaid and the charge released.

What can be used as collateral for a sequential-purchase bridge?

Either the new property being acquired, the existing property being sold, or both combined. The London case here used the existing student accommodation as security, which kept the new acquisition title clean for long-term refinancing later.

Are there penalties for repaying the bridge once the existing sale completes?

No. There are no early-repayment penalties on partial or full redemption. You only pay interest for the time you actually need the bridge. The London developer here repaid the £2.9 million as soon as the existing sale proceeds came through.