Overview
Thomas and David, experienced property investors, identified an opportunity to purchase a block of 12 purpose-built flats in need of substantial refurbishment. Their goal was to acquire, improve, and refinance the property into a long-term investment, generating consistent rental income.
Project Details
- Purchase Price / Current Value: £960,000
- Loan Required: £576,000 (60% LTV)
- Deposit Provided: £384,000
- Refurbishment Costs: £180,000 (funded by clients)
- Term: 12 months
- Interest: 0.83% per month, rolled up
- Exit Fees / ERCs: None
- Borrowing Entity: Limited company owned by Thomas and David
Strategy
- Acquisition via Bridging Loan – We arranged a 12-month bridging facility to provide the £576,000 funding needed for purchase. This term allows sufficient time for the heavy refurbishment works, which Thomas and David plan to complete largely themselves to reduce costs.
- Refurbishment & Value Creation – With £180,000 allocated to upgrades, the flats will be significantly improved in both quality and rental potential. Works are expected to take 6–8 months, but the 12-month facility provides flexibility for any unforeseen delays.
- Refinance & Exit Plan – Once completed, the block is expected to achieve a Gross Development Value (GDV) of £1.8 million.
The planned refinance is a term mortgage at 75% LTV (£1,250,000) over 25 years, which will:
- Repay the bridging loan in full.
- Return Thomas and David’s initial £384,000 investment.
- Release additional funds for further investments.
Financial Outcome
- Term Loan: £1,250,000 over 25 years
- Monthly Repayments (Capital + Interest): £8,834
- Rental Income: £10,800 per month
- Monthly Net Profit: £1,966
Timeline
- Bridging Loan Completion: Expected within 3 weeks of submission.
- Refurbishment: 6–8 months.
- Refinance & Long-Term Letting: Following completion of works.
Conclusion
This case study demonstrates how a carefully structured bridging facility can enable investors to secure opportunities, add value through refurbishment, and transition into profitable long-term investments. Find out why bridging loans are becoming more popular in our recent blog HERE.
