Refinance Farm With Bridging Loan To Resolve Divorce Settlement

A complex scenario needing a quick resolution in the wake of a divorce. Our broker found a specialist lender, getting the client a beneficial valuation despite restrictions and initial delays.

The Scenario

Our client came to us looking to refinance the title for his farm in the wake of a divorce – the title consisted of; a main farmhouse property, two buy-to-let properties, and the surrounding land which encompassed the working farm (in which he owned caravan sites and solar farming installations).

As the title had been jointly owned, he needed to raise funds equal to the value of the title as a consequence of the divorce. He was keen to refinance to meet this requirement and would need a net loan of £745,000.

The main delay was in the agricultural restriction placed on the title – any property with such a condition limits the occupation of property on the land to only those involved in a working farm.

The impact is a diminished market for properties under this restriction; the only available buyers are those that will use the properties for agricultural purposes.

In the case of our client, this would affect the valuation of his properties under the title and, potentially, the number of lenders willing to lend against the title.

Our client did not intend to sell the properties under the title - he needed the money that refinancing could provide to resolve his situation. However, the agricultural restriction on the title still has the same consequences, regardless.

Hence, he came to us to resolve the scenario and find the best possible solution in a timely manner.

The Solution

Due to the restrictions, and the nature of the properties involved, the loan type would fall under an unregulated transaction. The difficulty was in finding the correct lender for this scenario.

Initially, a lender had carried out an expensive valuation, which turned out to be unworkable. Many lenders will determine valuation by the 180 Day Value - a short-term valuation of what the property would sell for within the limit of only 6 months.

Naturally, this valuation is often lower than that of the Open Market Value and would not resolve our client’s needs.

Instead, our experienced broker took the case to a farm finance specialist to get a true valuation via the latter option; the open market value.

In doing this, our diligent broker managed to organise finance through the second lender by reformatting the valuation to the client's benefit and raising the necessary funds against the title.

Our broker found the right specialist lender for the case through an extensive network of unregulated brokers often unavailable to the public.

This case had the potential to be a drawn-out affair had the client not turned to us for assistance. Thankfully, our specialist broker was able to secure finance quickly - just under two weeks - despite the original valuation's delay and the agricultural restrictions placed on the title.

The loan of £745,000 was finalised just in time for our client to resolve his divorce settlement.