Cross Charge Bridging Loan

By leveraging the equity in their existing property, we facilitated a cross-charge bridging loan to fund the purchase and renovation of a commercial property for conversion. This streamlined approach minimized costs and ensured a smooth transition to long-term financing.

1/3/20241 min read

a bridge with a wooden bridge over a path
a bridge with a wooden bridge over a path

The Client

A client had an initial enquiry for bridging finance. The client was looking to purchase a commercial property for £150,000 and carry out £25,000 of works to convert it to the upstairs commercial area into residential accommodation under Permitted Development (PD) Rights.

At the time, the client had no cash to purchase the property, therefore needed to raise the funds elsewhere.

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The Solution

As the client had an unencumbered property worth £100,000, we sourced a lender who could provide a “Cross Charge Bridging Loan” across both properties at 75% LTV. This allowed the client to raise £75,000 against their existing property and provide a loan of £112,500 on the commercial property. The capital raising covered the initial £37,500 deposit for the commercial property purchase, and the remaining £37,500 covers the cost of works, legal fees and interest costs on the loan.

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The rate secured for the bridging loan was 0.85% per month due to the commercial property involved, however as it was a cross charge application, it meant only one application was required and one set of legal fees for the lender to help reduce time and money.

As the clients intention is to remortgage the finished semi-commercial property, the benefit of the lender used is that the client can refinance both properties with the same lender onto individual mortgages with minimal legal work, reduced arrangement fees of 0.75% (standard 1.50%) and reduced re-inspection valuation fees to provide a seamless transition from the bridge.    

If you have any questions about Commercial Finance, contact us today to speak with our CeMAP certified Mortgage Advisors at 0113 8730 740. Alternatively, complete this short online form for a callback.