Editor's note: This brief was summarised by The Property AI Newsroom from a report by Mortgage Solutions. Read the original article for full details.

Flexible Drawdown Finance Offers On-Demand Cash Flow for Property Borrowers

Jonathan Rubins, director and chief commercial officer at Alternative Bridging Corporation, has set out the case for flexible drawdown finance as an alternative to traditional lump-sum lending. Writing in Mortgage Solutions, he argues that borrowers do not always need their full funding at once, and that taking an entire loan upfront may not be the most efficient approach.

Instead, a flexible drawdown facility gives borrowers access to an agreed amount of capital that can be drawn against as and when required, whether for staged development works, fluctuating working capital needs, or a property investor keeping funds ready for a future acquisition.

Funding when it is needed

Rubins notes that traditional lending generally provides a lump sum at completion, which works well when the whole amount is needed immediately. But many funding requirements arise gradually: a refurbishment or development project may involve costs spread over several months, and businesses may see peaks and troughs in working capital needs.

At Alternative Bridging Corporation, the Alternative Overdraft is a flexible loan facility that can be drawn upon and repaid as funding requirements change. Borrowers only pay interest on the money they have drawn down, which the firm says can make borrowing more cost-effective while giving borrowers confidence that funding is available when they need to act.

Keeping a development moving

Property projects rarely follow a straight line, and unexpected expenditure can emerge along the way. Rubins cites the example of a client developing a six-unit industrial site who needed additional funding to complete the project when costs increased. Rather than raising finance against the development itself, the client used an existing investment property in Bethnal Green as security. The property, containing three flats let on assured shorthold tenancies (ASTs), was valued at £1.67m and supported a £344,000 Alternative Overdraft facility.

Lending against an existing asset rather than the development site also saved time on legal work and due diligence, according to the article.

Flexible finance for changing business needs

A second case saw an East Sussex client requiring capital for two purposes: purchasing artwork for his studio and refurbishing nightclubs he owned in London and Brighton. Alternative Bridging provided a £580,000 Alternative Overdraft secured as a second charge against his main residence, releasing funds as required while interest accrued only on the amount actually drawn.

For UK letting agents and inventory clerks, the cases are a useful reminder that landlords and developers with tenanted stock, including AST-let flats, can unlock liquidity against existing residential assets to keep projects and acquisitions moving.