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Case Study: Auction Purchase Bridge

Auction Purchase Bridge

In the property market, opportunities often present themselves in unique and time-sensitive ways. One such scenario is the Auction Buy-to-Let (BTL) purchase, where investors can acquire promising properties with the potential for substantial returns.

The Basics:

  • Location: Essex

  • Purchase Price: £250,000

  • Additional Budget: £17,500 (Investor's own funds)

  • Estimated Gross Development Value (GDV): £300,000

  • Initial Gross Loan: £162,500

  • LTV: 65%

  • Date Built: Circa 1900

  • Property Description: A charming two-bedroom mid-terrace period house with a rear garden.

The Opportunity: The client identified this property as a prime investment opportunity due to its attractive estimated GDV and potential for refurbishment. With a solid structure and a traditional layout, it represented an ideal candidate for renovation and future rental income.

Challenges Faced: A traditional mortgage was not feasible due to the time-sensitive nature of auction purchases.

Key Steps Taken:

  1. Initial Assessment: We assessed the property's potential value after refurbishment and the investor's overall financial situation to determine the loan terms.

  2. Bridge Approval: The bridging loan was approved, providing the necessary funds to secure the property at auction and cover the initial costs.

  3. Property Refurbishment: With ownership secured, the client can utilise £17,500 of their own funds and the bridging loan for renovation expenses.

  4. Exit Strategy: Simultaneously, the client devised a clear exit strategy, planning to refinance the property once the renovation is complete. The anticipated rental income from the refurbished property is expected to be sufficient to support a Buy-to-Let (BTL) term mortgage.

  5. Results Achieved:

  • The client successfully acquired the property at auction, thanks to our swift approval and funding.

  • The property can now be transformed into a desirable rental unit, potentially generating a steady stream of income.

  • The estimated GDV allows for a significant potential profit margin.

Seizing opportunities like auction purchases requires flexibility and access to rapid financing. This case study demonstrates that a bridging loan can help an investor acquire, renovate, and potentially profit from a promising property.


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