Buzz has begun to expand its opportunities and is opening the door for investors and developers seeking small short-term bridging loans. We offer low competitive rates, bespoke arrangements and will endeavour to overcome hurdles that many other lenders would shy away from.
Alex Martin of Buzz Capital walks us through a recent deal that demonstrates just that.
“I wasn’t expecting anything straight away when I called Richard Morris to discuss his borrower’s requirements – but on mentioning our current focus on short, sub £300,000 property bridges, he asked how quickly we could complete as a client was looking to bid the next day on a property with a 14 day completion deadline.
The answer here is always “We can do it in a few days, provided we get all the documentation and there are no unforeseen issues.”
Buyers always take a risk when buying at auction that the financing will not come through in time so it is worth having a back-up plan in place before bidding on your next dream project.
In this particular case the buyer felt confident that everything would work out and the following day, he won the auction and handed over his deposit.
Now the clock was ticking on a very short completion so our underwriters and our solicitors got straight to work.
Almost immediately problems appeared. Firstly, there was a shortage of RICS Red Book valuers available in the area. Secondly, it transpired that the property had been purchased just a month before at another auction, but that buyer decided not to keep it and immediately re-listed.
This is not a problem in itself however it can cause issues with title registration and indeed our solicitor reported back that he had concerns over the registration process given that there were 5 parties involved – the original seller, the previous seller (a bank), the buyer, Buzz and the estate management company.
Thirdly the minor works that were to be carried out were too small to be covered on a refurbishment buildings insurance policy. Usually buildings insurance does not cover properties undergoing renovation. At the very least, the insurance company has to confirm that the insurance will be valid during the works, and often a new policy or extension will be required. Even where the renovation works have been OK’d any damage caused by the works will not be covered.
Whilst none of these issues were insurmountable, time was very short and with this in mind our underwriters suggested we look at additional security, should any of these jigsaw pieces fail to fall into place. The very last thing we would want to see is the purchase fall through and the borrower lose his deposit.
Fortunately, the buyer was happy for us to take a charge on his home, but by this stage, it was too late to secure a valuer. In instances like this Buzz has the flexibility to take a view and with some research of our own, we were happy that there was sufficient equity there to cover the risk.
Of course, one solution often gives rise to another problem. An “Etrige Letter” is a letter required from an independent advisor confirming they have taken a spouse through the risks of agreeing for their home to be used as security for a different borrower. Our solicitor advised that we could not take the charge without one and now the race was on to get it issued in time to complete the following day.
Happily, on the morning of completion day, we received the Etridge letter and later that day, forwarded funds and completed the deal.”
The moral of the story: Auction purchases can be tricky but Buzz Capital and our advisors will do everything we can to make sure the deal completes!
If you are looking for efficiency, speed, and reliability with your next bridging/development loan, then get in touch to see if Buzz can assist with your next project.