Finance specialist District & County Investments has provided short-term bridging finance of £370,000. The funds cover the full purchase price of a detached four-bedroom house in Luton. The property was acquired on terms below its regular market value.
Lending based on actual market value
The underwriting methodology proved decisive for structuring the facility. In determining the loan amount, District & County Investments did not base the calculation on the discounted purchase price, but instead assessed the facility against the property's determined open market value. This valuation approach enabled the loan to cover the entire purchase price due, without requiring the buyer to introduce additional equity on acquisition.
This approach differs from the conservative practice of many traditional lenders, who typically assess loan-to-value limits strictly against actual acquisition costs. When a buyer secures a property at a substantial discount, basing lending on open market value allows the lender to fully utilise the value of the security asset whilst still maintaining robust risk parameters.
Key terms of the finance facility
- —Provision of a £370,000 bridging loan by District & County Investments
- —Secured against a detached four-bedroom family home in Luton
- —Property acquisition demonstrably below regular market value
- —Full coverage of the agreed purchase price through debt financing
For the investor, funding the entire purchase price offers significant liquidity management benefits. Financing the acquisition in full preserves equity, which is vital for opportunistic transactions in the UK residential sector. Financial flexibility is thereby fully retained for subsequent projects within the portfolio.
The completion in Luton highlights the role of specialist lenders within bridging finance. A willingness to apply open market value as the primary benchmark for lending commitments enables swift completions when opportunities for below-market acquisitions arise.
