A Spanish investor has just secured a vital £1.2m lifeline in the form of a bridging loan to refinance a mortgage on a buy-to-let property in Chelsea worth £1.725 million, which was due to expire and had failed to attract buyers at its target price.
The loan, arranged by Somo through its Prime product, covers 70% of the property's value at an interest rate of 0.75% per month, providing breathing space for the investor to sell the asset or use the capital to invest in a new business venture – a beach club at a Spanish resort.
Commenting on the transaction, Rob Johnson, Somo's underwriting director, noted that property sales timelines are rarely straightforward and that bridging loans offer flexibility when traditional mortgage products are scarce or rapid completion is essential. He highlighted that owners with significant equity can avoid distressed sales by utilising such finance.
The case comes amidst a slowdown in housing transactions across the UK, which have declined for the second consecutive month. In prime London areas like Chelsea, sellers often face extended marketing periods to achieve their desired sale prices. Bridging finance helps property owners manage their finances without being forced into accepting lower-than-desired offers.
As buy-to-let investors navigate the challenges of refinancing and regulatory shifts, including changes to eviction processes, this £1.2 million facility represents a typical bridging arrangement in London's prime residential market, where high property values support substantial loan amounts at conservative LTV ratios.