Four Working Days to Complete, or He Lost His Deposit

The deal

What Had Happened

He had exchanged on a new build off plan roughly two years before, which meant he was contractually committed to buy it once it was finished. That's normal, and it's also where this kind of problem starts.

When the time came to complete, he couldn't get a buy to let mortgage on it. The development was an investor led new build conversion, and most lenders won't touch that type of property. His original broker had gone to lender after lender and collected decline after decline.

Then the developer served ten working days' notice to complete. If he missed it, the contract was rescinded and he lost the entire deposit, which was twenty per cent of the purchase price. Not a penalty. The whole deposit.

By the time he reached us there were fewer than five working days left. Most people would call that a dead deal.

The Two Questions That Changed It

Why do you need bridging?

We ask this every single time, and quite often the honest answer is that the client doesn't. Here he genuinely did. There was a contractual deadline with a real consequence attached and no product on earth was going to be arranged the ordinary way in four days.

What else have you got?

This is the question that saved it.

Bridging on the buy to let alone would have been awkward. The exit was messy, the property was the exact type lenders had already declined, and at that point you're looking at roughly sixty five per cent of value at best.

It turned out he owned the house he lived in outright. No mortgage on it, no charge against it, worth around five hundred and twenty five thousand pounds.

That changed the shape of the whole case. We could secure the bridge against the residential instead of the problem property.

The Numbers

He didn't need the full purchase price, because the deposit had gone in two years earlier. And borrowing against a property worth considerably more than the amount needed put the loan to value low enough to open doors that are shut at higher leverage.

Why Low Leverage Bought Us the Time

This is the part worth understanding, because it's the whole reason four days was possible.

At a low loan to value, lenders will consider a desktop valuation rather than sending somebody out. That matters enormously. A physical valuation means instructing it, paying for it, waiting for a valuer with a diary that's already full, then waiting again while the lender reads the report. Call it one to three weeks.

We went to a lender who would run an automated valuation, and it passed. Ten minutes instead of three weeks.

Some of that's luck and I'll say so. An automated valuation either passes or it doesn't, and if it hadn't we'd have been into a completely different conversation.

One Solicitor Instead of Two

Because the loan was secured on his own home, this was a regulated bridge. That sounds like it would slow things down. In this case it helped, because some lenders will allow dual representation on regulated cases, where one firm acts for both the borrower and the lender.

Anyone who has waited on two sets of solicitors talking to each other knows what that saves. Realistically another three or four weeks.

That lender wasn't the cheapest on the market. It was the right one, because it allowed the desktop valuation and the dual representation, and those two things were worth more than a better headline deal that took six weeks.

The Exit, and the Two Backups

No lender lends on a deadline alone. They lend on how they get paid back, and the exit has to be plausible to them rather than plausible in your head.

• Plan A. Remortgage the residential onto a normal residential mortgage. He had the income and the affordability, he simply had never had a mortgage on it.
• Plan B. Move into the flat he was buying, let out the house, and clear the bridge with a buy to let mortgage on the house instead.
• Plan C. Sell.

Three ways out, each one workable on its own. That's what made an underwriter comfortable in the time available.

The lender took a first charge over the residential and a comfort charge over the buy to let once it completed, so it had visibility of both. The solicitor made that work inside the timescale.

Why It Actually Came Together

It wasn't one clever thing. It was six ordinary things all lining up at once, and if any one of them had been missing it wouldn't have happened.

• The right lender for the situation rather than the best rate on a comparison.
• A low loan to value, which is what made a desktop valuation possible at all.
• A straightforward property as security. A mid terraced house, nothing quirky.
• A genuine exit, with a second and a third behind it.
• A motivated client. When we asked for a document he sent that document, immediately, without asking why and without sending the wrong one. That sounds small. It's worth days.
• A solicitor who drove to the client's house to get the papers signed. That cost more than a cheaper firm would have. It cost a great deal less than losing the deposit.

What to Take From It

Two things.

First, if you're stuck, the question isn't just what you're buying. It's what else you own. An unencumbered property sitting in the background can completely change what's possible, and plenty of people never think to mention it.

Second, speed isn't something you buy from a lender. It's something you stop losing. The valuation route, the solicitor, the documents arriving on time, the exit being credible. Every one of those is a place where days disappear, and this case worked because none of them did.

Up against a deadline? Ring 0330 133 4442 or book a call and we will tell you honestly whether it is achievable. Twenty minutes, no credit check.