A Spanish-based property investor has secured a £1.2 million bridging loan against a Chelsea buy-to-let property, allowing them to refinance an expiring mortgage facility whilst releasing capital for a hospitality business venture.
The loan, arranged by Somo through its Prime product, was secured at 70% loan-to-value against a Chelsea end-terrace property comprising two self-contained flats under a single title. An independent surveyor valued the property at £1.725 million.
Transaction details
The borrower had reached the end of a six-year fixed-term facility with their existing lender. The property had been listed for sale, but offers received fell below the owner’s target price. The bridging loan, charged at 0.75% per month, provided time to secure a suitable buyer whilst releasing working capital for a beach club business at a Spanish resort.
The case highlights the role of short-term finance in property sales that extend beyond anticipated timelines. Bridging loans typically serve as interim solutions when traditional mortgage products are unavailable or when speed of completion is required.
Rob Johnson, underwriting director at Somo, said: “Property sales don’t always happen on a perfect timeline. In this case, the borrower had significant equity in a quality Chelsea asset but needed additional time to achieve the right sale price.”
Market context
The transaction comes as UK housing transactions decline for second consecutive month, with sellers in prime London locations often requiring extended marketing periods to achieve target prices. The use of bridging finance allows property owners to avoid distressed sales whilst managing changing financial circumstances.
Buy-to-let investors increasingly face refinancing decisions as fixed-rate mortgages arranged during lower interest rate periods reach maturity. The sector has also seen regulatory changes, with landlords facing new eviction processes as Section 21 is abolished, affecting long-term portfolio strategies.
The £1.2 million facility represents a standard bridging arrangement in London’s prime residential market, where property values support substantial loan amounts at conservative loan-to-value ratios.
