![Case study: United Trust Bank Bridging funds 95% of purchase and lease extension costs UTB Bridging Case 1](https://barcadiapublications.fra1.cdn.digitaloceanspaces.com/property-reporter/img/article/utb_bridging_case_1-15287.jpg?v=74aeae0cffaa49fba8a81d22c3a6d365)
United Trust Bank's bridging team was approached to assist a customer in purchasing a flat with a remaining lease of just 2 years. The purchase price was £400,000 and the cost of extending the lease by another 125 years was also £400,000. However, with the lease extended, the flat would be worth in the region of £1.3m.
Using the same criteria the Bank would use for a Below Market Value deal (minimum 10% net contribution) UTB was able to advance the client 90% net of the purchase price (£360,000) plus all the money required to extend the lease (£400,000).
With UTB happy to work on the £1.3m end value, they provided 95% net of the overall funding required, with the borrower only providing 5%.
When the transaction was complete and the lease extended, the client simply refinanced out on a term mortgage at c70% LTV to exit the bridge.
Craig Taylor, Key Account Manager – Bridging, at United Trust Bank said: "As in this case, it is very unlikely a client has the cash reserves available when a lease extension is that much money, meaning traditionally only a cash buyer could take advantage of such an opportunity."