In early 2017, United Trust Bank’s bridging team was approached by a broker acting on behalf of the parents of two sons who were in the process of purchasing a luxury apartment.
The sons had exchanged contracts on the apartment off-plan in 2014 with a deposit of £1.2m. Their intention was to fund the remaining balance due on completion with a mortgage. Three years on, when applying for the mortgage, the lender’s valuer substantially down-valued the apartment, greatly reducing the amount of mortgage they’d be prepared to advance.
The parents agreed to provide the additional money needed to top up the maximum mortgage offered and having discussed their options, they decided a bridging loan would be appropriate. UTB agreed to provide an £850,000 bridging loan secured against the parents’ main residence in West London and an investment property. The exit would be achieved by the sale of the parents’ main residence which was already on the market.
This generous gesture by the parents allowed the sons to complete the purchase of a property they really wanted and protected the substantial deposit they’d already paid. In addition, the parents gifted their contribution to their sons having taken appropriate advice.
Rob Love, Head of Broker Development – Bridging, at United Trust Bank, commented:
“Although the sums involved in this example were quite substantial, we complete many of these types of cases where a property is being purchased by sons or daughters and the parents provide additional funds and or security to help them get on the property ladder. At UTB we are able to structure such transactions to best suit the borrowers and, as in this case, don’t always insist on taking a charge on the property being purchased.”
Loan Amount – £850,000
LTV – 26%