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Case study: Cross-border lending issues are not only Brexit-related – Smart Money

by: Paul Crewe, managing director at Smart Money
  • 08/02/2018
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Case study: Cross-border lending issues are not only Brexit-related – Smart Money
Brexit is of course grabbing many headlines, but there are borders within the UK which can impact property transactions, as Paul Crewe explains.

Unlike an increasingly tangled EU relationship, a move across UK borders may not initially seem like it should generate too much additional red tape.

However, when you take into account the idiosyncratic nature of Scottish property law then an often-unfamiliar layer of complexity can throw a curveball or two into the equation.

The case involved a move from West Sussex to Berwickshire in the Scottish borders. For a little background the property being purchased was a spectacular eight-bedroom property built by the celebrated Scottish Architect William Burn, who also designed Inverness Castle in the Scottish Highlands and Montagu House in Whitehall, London – the site of the first British Museum.

The case originated from an intermediary who contacted our Glasgow office after the potential purchasers – a couple who both hold senior positions in successful businesses – faced initial disappointment after failing to secure mainstream funding to acquire the listed building.

Despite a strong employment history and high income levels, all mainstream lending options were quickly exhausted and the couple were left devastated at the thought of not being able to secure their dream property.


Cross-border charging

This was an unusual case as it involved cross charging on homes in England and Scotland, which allowed the borrowers to unlock more capital.

In more complex situations like this, it’s key that a strong relationship exists between the broker and the lender because they need to work closely to make sure they get the best possible outcome for the customer.

Our research found that Together was the right lending partner for this particular transaction.

After carefully reviewing the case, it agreed to provide a regulated bridging loan which allowed the customers to cross charge using their £2.5m farmhouse in West Sussex as security, as well as the £1.2m Scottish property to complete quickly so that they did not miss out on the opportunity.

The couple plan to sell the English farmhouse within the next 12 months to pay back the bridging loan.


Local knowledge key

This transaction was secured by a flexible, common sense approach to lending but local knowledge and expertise was equally important in bringing this to a successful conclusion.

The borrower’s background and budget may not have initially screamed specialist lending but, as they quickly found out, lending barriers are still evident and applicable in a mainstream situation.


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