A business-owning couple approaching retirement had found the ideal bungalow for the next stage of their lives. The property was available, but most of their wealth was tied up in their current home, which had not yet sold. Rather than risk losing the purchase while waiting for a buyer, they required a short-term funding solution that would allow them to move quickly.

Working closely with the clients, Steve Verrell structured a bridging finance facility that released equity from their existing property, funded the entire purchase, covered associated transaction costs, and provided sufficient time to sell their current home without unnecessary pressure.

This type of scenario is increasingly common as homeowners seek to secure a new property before their existing residence has completed its sale.

Many borrowers searching for bridging finance to buy a house before selling their current property encounter challenges because traditional mortgage lenders are not designed to solve short-term timing gaps between transactions.

When Equity Exists But Liquidity Does Not

The clients owned a substantial property with significant equity and only a modest outstanding mortgage balance. Although their home had a strong value, that equity remained inaccessible until a sale completed.

At the same time, they had identified a bungalow that perfectly suited their future plans. Waiting until their existing property sold introduced considerable risk. The vendor could withdraw, another buyer could emerge, or market conditions could change.

Traditional residential lenders often struggle to accommodate situations where the deposit is effectively trapped within another property. While the clients had strong incomes through their established business and a consistent financial track record, a conventional mortgage would still require an immediate deposit source and would not solve the timing issue between purchase and sale.

Furthermore, arranging a long-term residential mortgage simply to bridge a temporary funding gap would have introduced unnecessary complexity and potentially higher overall costs.

Why a Bridging Loan Was More Appropriate

The key objective was not long-term borrowing. The clients simply needed temporary access to the equity already sitting within their current home.

A bridging facility was therefore a more logical solution because it focused primarily on asset value and exit strategy rather than long-term affordability alone.

Specialist lenders are able to assess scenarios differently from mainstream banks. Rather than concentrating solely on monthly income calculations, they evaluate the strength of the underlying security and, crucially, the credibility of the repayment strategy.

In this case, the repayment route was straightforward. The existing property contained more than sufficient equity to repay both the outstanding residential mortgage and the proposed bridging facility upon sale.

This provided the lender with a clear and realistic exit strategy, significantly strengthening the application.

Structuring the Transaction

The purchase required funding for the full acquisition price together with the associated Land and Buildings Transaction Tax liability.

To maximise flexibility and preserve the clients' available cash reserves, the facility was structured on a retained interest basis. This meant the interest for the agreed term was calculated upfront and retained from the gross facility.

As a result, the borrowers had no monthly payments to make during the bridging term.

This approach offered several advantages.

• Firstly, it removed cash flow pressure while the existing property was being marketed and sold.
• Secondly, it ensured certainty regarding borrowing costs because the interest rate was fixed.
• Thirdly, the structure aligned perfectly with the clients' objective of making a clean transition between homes without relying on ongoing monthly servicing.

An important element of the transaction involved the lender taking a second charge against the clients' current residence. This allowed the lender to utilise the substantial equity available within the property while remaining behind the existing first-charge mortgage lender.

Traditional lenders often struggle to accommodate this type of arrangement because their underwriting models are generally designed around straightforward residential purchases. Specialist bridging lenders, however, are accustomed to creating bespoke structures where property equity forms the basis of the funding solution.

Assessing Risk and Underwriting Considerations

Although the clients had strong combined earnings from their business and a history of stable income, the lender's primary focus was the exit strategy.

Underwriters needed confidence that the existing property could be sold within a reasonable timeframe and that sufficient equity existed to clear all outstanding borrowing.

The relatively low mortgage balance on the current home was particularly attractive from a risk perspective. Even after accounting for the bridge facility and associated costs, there remained a substantial equity cushion.

The lender also reviewed the clients' wider financial position, including existing credit commitments. While they carried vehicle finance and credit card balances, these obligations did not materially undermine the transaction because the bridge was supported by significant property equity and a clearly defined repayment route.

This demonstrates an important distinction between residential mortgage underwriting and bridging finance underwriting. In many cases, bridging lenders are more focused on asset strength, security position, and exit certainty than on traditional affordability calculations.

A Successful Outcome Without Waiting for a Sale

The final structure provided funding sufficient to acquire the bungalow and cover associated purchase costs while giving the clients up to twelve months to complete the sale of their existing property.

Because the interest was retained, no monthly payments were required throughout the agreed term.

Most importantly, the clients were able to proceed with the purchase immediately rather than risking the loss of their chosen property while waiting for a buyer.

This type of bridging finance strategy is frequently used in situations where timing rather than affordability is the primary obstacle. Similar approaches are often seen in downsizing transactions, chain-break scenarios, and broader bridging finance strategies where equity needs to be accessed quickly. It also shares characteristics with certain complex income structures, where specialist lenders take a more flexible view than mainstream institutions.

Key Takeaways

What made this transaction possible was not unusually high income or an exceptionally large deposit. Instead, it was the existence of significant property equity combined with a credible and well-defined exit strategy.

Traditional lenders often struggle to address the practical challenge of purchasing a property before an existing residence has been sold. Specialist lenders are able to assess the broader picture, including security strength, available equity, and repayment plans.

For homeowners facing similar circumstances, the most important consideration is demonstrating how the bridging facility will ultimately be repaid. Where a property sale provides a realistic exit and sufficient equity exists, bridging finance can create opportunities that would otherwise be difficult to achieve through conventional lending.



By carefully structuring the facility around the clients' objectives, Steve Verrell enabled them to move forward confidently, secure their next home, and avoid unnecessary pressure to sell their existing property prematurely.