Development of fire damaged property

Our customer was looking for funding for a project consisting of an existing 3 bedroom house with 5 acres of land and stabling that has been extensively damaged by fire. The customer purchased the property for £435,000, with completion due 6 months from exchange of contracts. During the 6 month period our customer was allowed to carry out works on the property.

Planning permission was obtained to extensively extend and alter the property to provide 5 bedrooms, 3 bathrooms, 3 living rooms and detached garage with extensive landscaping. The building works were undertaken on an agreed fixed price basis and were due to be completed by the end of the 6 month period.

Funding of £450,000 was required to enable the completion of the property purchase with additional capital to assist with costs.

How did we help?

The difficulty with this proposal was the loan amount required was above 100% of the property purchase price. We therefore required a lender to base the proposition on the increased value of the property post alterations.

The projected end value of the property was estimated at £700,000 and once this was confirmed by the lenders panel valuer, we were able to arrange the finance as follows:

Scheme: Bank Base Rate + 1.875%
Interest margin: 1.875%
Loan amount: £450,000
Loan to property value: 65% (new valuation) 103% (property price)
Repayment: capital and interest
Term: 25 years