Short-term finance for landlords to complete build to let

The clients are a married couple who are both full-time property developers and landlords with a large portfolio of rental properties in South East England.

In January 2016, they had started to build a six-bed detached house but due to changes in the design, discovered they had insufficient cash to complete the job. They wanted short term finance for 12 months with no exit fees as they hoped to complete the build in a shorter timescale whereupon they planned to refinance onto a buy to let mortgage.

The fact that the couple’s income is derived solely from rent meant that not all lenders would accept the case. Also, the small loan amount dictated that short term rather than development finance was required. We found a lender which deemed the couple a good risk based on their previous development experience and strong credit profile. The following terms were offered:

Property value: £500,000 in current state. Expected to be £650,000 once complete

Loan amount: £87,000

LTV: 18%

Rate: 0.95% pcm

Term: 12 months

Borrower: Joint application in individual names

Lender arrangement fee: 2% (£1,740)

Lender exit fee: Nil

Loan payment: £830 pcm

Consultant: Gareth Richards 01732 471627