Commercial property moves at its own pace and on its own terms. When an opportunity comes up, it rarely waits. Our client in this case was an experienced property investor based in Merseyside who had been watching a particular building in Liverpool city centre for over a year.
The building was a three-storey mixed-use block: ground-floor retail occupied by a long-standing local business, with four self-contained residential flats above on assured shorthold tenancies. The vendor had owned it for decades and wanted a quick, unconditional sale with a short completion period. Twenty-one days.
Our client had agreed a purchase price of £1.55m. He had around £400,000 available from the sale of another investment property and needed to fund the gap. His exit plan was to refinance onto a long-term commercial investment mortgage once the purchase had completed and he had had time to review the leases properly.
The challenges
Mixed-use properties are not always straightforward for bridging lenders. Some focus exclusively on residential security and will not consider anything with a commercial element. Others will consider mixed-use but apply stricter loan-to-value limits. The retail element in this case was let below market rent on a periodic arrangement, which added another layer of complexity.
We had to find a lender who was experienced with mixed-use commercial property, comfortable with the Liverpool market, and able to move within the 21-day window.
Case at a glance
| Property | Mixed-use block, Liverpool city centre |
| Purchase price | £1,550,000 |
| Loan amount | £1,200,000 |
| Client contribution | £350,000 plus costs |
| LTV | 77.4% |
| Rate | 0.89% per month |
| Term | 12 months |
| Completion | 18 days from instruction |
| Exit | Refinance to commercial investment mortgage |
Finding the right lender
We had a shortlist of three lenders within 24 hours of the initial call. Two of them declined at the enquiry stage, one because of the commercial element and one because of what they described as location concerns with the specific postcode. The third came back with an indicative term sheet within 48 hours at 0.89% per month on a 12-month term.
The rate was slightly higher than a straightforward residential bridge would attract, which is normal for commercial and mixed-use security. The lender required a commercial valuation from an RICS firm with experience of the Liverpool investment market, which was arranged within three days.
The valuation confirmed the property's worth and the rental income from both the residential and commercial tenants. Legal work ran in parallel and we completed on day 18, three days ahead of the vendor's deadline.
The refinance
Four months after completion, our client refinanced onto a long-term commercial investment mortgage at a much lower rate. The bridging loan was repaid from the refinance proceeds. He reviewed the retail lease and negotiated an upward rent review shortly after taking ownership, which improved the yield and strengthened his refinance application considerably.
If you are looking at commercial property in Liverpool or anywhere across the North West and need to move quickly, we have experience with exactly this sort of transaction.