A pair of first-time borrowers required funding to purchase a new-build, two-bed flat in a recently completed development in Birmingham. One of the borrowers was a foreign national, the other lived overseas, and both had no prior property investment experience. As such, they needed a lender able to verify source-of-funds from overseas and support their planned exit onto a buy-to-let mortgage.
The property was valued at £309k, however, a significant portion of this represented new-build premium. Excluding the premium, the resale value was £260k. We provided a £195k bridging facility at 75% LTV against the adjusted valuation, enabling the borrowers to complete the purchase.
Key Challenges and Solutions
Overseas borrower requiring enhanced AML and remote execution of legal documents
With the borrower based in an HRTC country, we needed to complete enhanced AML checks while also finding a compliant way to execute security documents without UK travel.
We conducted a full review of payslips, bank statements and transactions to establish a clear source of funds, and arranged for the borrower to execute security documents on video call with a UK solicitor alongside a local solicitor in the borrowers’ country. The completed documents were then posted to our solicitors.
New-build premium reducing refinance confidence
The valuation report reflected the new-build premium, creating uncertainty about refinancing to term debt. To safeguard their exit, we based our lending on the resale value rather than the original new-build figure. We then maximised leverage against the resale value and retained interest to ensure the borrowers received the maximum possible advance.
Strategic lending exception
Given the borrowers' experience, supporting this deal at 75% LTV means this case would fall outside of our standard criteria . After reviewing the borrowers' background, including one being UK-based with Republic of Ireland citizenship, and drawing on our experience completing similar transactions, we approved the facility on an exception.
Outcome
We provided a £195k bridging loan at 75% LTV on a 9 month term, enabling the borrowers to complete their first UK investment purchase with a path to refinance onto a BTL mortgage.
Takeaway
- Our ability to apply enhanced AML processes enables us to support complex borrower profiles
- Pragmatic valuation approach protects both the borrower and their exit strategy
- Remote legal arrangements allow overseas clients to complete without travel
- Ideal partner for first-time or international investors entering the UK market
