A guesthouse owner contacted us to help her raise finance against her B&B to fund her divorce settlement. Although she and her ex-husband owned the property outright, she had already been turned away by her bank as her net profits were seen as too low.
She also wanted interest only terms to keep her outgoings to a minimum. The B&B is located in a scenic, touristy village just outside of Bath.
In the past our client and her then husband had run the property as a care home but when they separated they closed the business. The husband then agreed that the wife turn the property into a B&B and he would not seek financial settlement until their children had flown the nest.
Today, our client lives on the top floor of the building and the two below are used for the B&B. The property is in good condition but still requires some refurbishment work to complete the transformation from care home to B&B.
We put together a business and funding proposal which we then presented to a number of high street lenders which normally consider these scenarios.
Unfortunately, none were willing to offer interest only terms on such a low net profit, despite the client wanting a relatively small loan to value.
So, we approached a specialist commercial lender (which can only be accessed via intermediaries) and started negotiations. We demonstrated that the property was only 90% refurbished and could prove that the significant building works were one-off costs rather than ongoing expenditure.
The lender agreed that, once the works were complete, there was ample room for increasing turnover and profit which would allow our client to repay the loan relatively quickly.
On that basis, the lender offered the following terms on an interest only basis.
Property value: £950,000
Loan amount: £240,000
Rate: 6% term tracker (Lender’s LIBOR + 5.25%)
Term: 10 years interest only
Lender arrangement fee: 1.7% £4,080
Mortgage payment: £1,220 pcm
Consultant: Andy Elley, 01732 471644
"I approached Mortgages for Business after having been in contact with several other brokers who left me disappointed.
I would like to applaud Andy Elley for a job well done. From our initial contact until my mortgage was complete he was with me every step of the way,even visiting my business premises. Andy gave me realistic guidance, assisted me with applications which he presented to various prospective lenders on my behalf.
Andy appeared to fully understand my requirements, he kept me fully informed and updated with prompt and frequent communication, he was responsive to my doubts and his reassurance resulted in a less stressful experience than it otherwise may have been.
I would not hesitate to work with Andy in the future."