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How they will pay.

THE pair plan to use a closed bridge deal to buy Michael Jackson's property, whereby they would employ a same day remortgage.

If they can purchase the property 20% below its market value, then they can receive an 85% mortgage on it. So, if the property is valued by an independent valuer at pounds 10m then they would take a mortgage of pounds 8.5m. However the actual price they would pay would be pounds 8m.

A bridging company would lend this pounds 8m until the mortgage was received, and in turn this company would receive 1% for lending the cash - or pounds 80,000.

The pair would immediately repay this debt to the bridging company with the pounds 8.5m mortgage they received. The solicitor would take a further 1%, or another pounds 80,000.

And that would leave them with pounds 484,000 to do as they please. Michael Jackson could rent it, alternatively it would be turned into an attraction park to pay back the mortgage.
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Publication:The Journal (Newcastle, England)
Date:Mar 11, 2008
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