We were approached by a full-time landlord and developer with experience of both residential and commercial property who was looking for refurbishment finance to complete the renovation of a five-bed terraced house in London.
The client had bought the property with the help of a bridging loan but had run out of funds to complete the work. He estimated that he would require £42,750 for the renovation which was likely to take a further 6-8 weeks, and £669,750 to repay the existing loan.
When talking through the client’s options, he revealed that he was yet to determine the final exit strategy, believing that either sale or rent would be a viable outcome. However, as he preferred to sell, we suggested that he take a 12-month term to allow for unexpected delays in refurbishment followed by sufficient time to realise a sale.
The client already has a few mortgaged properties with one of the challenger banks and a very good relationship with them, so we proposed to approach them again on his behalf, not least because they have an extremely competitive 12-month refurbishment product with no Early Repayment Charges – perfect for our client’s requirements.
To accompany the application, we prepared supporting documentation which included an itemised schedule of works and a clear disposal strategy. Comfortable with the valuation, the strength of the client’s proposal and experience as a developer and landlord, the bank offered the following terms:
Property value (after works): £1,250,000
Property value (before works): £950,000
Loan amount: £712,500
Term: 12 months’ interest only
Monthly payment: £6,449
Lender facility fee: 1.7% added to the loan (£12,113)
Lender exit fee: £200
Estimated rental income, if required: £4,000 (post-refurbishment)
Consultant: Jeni Browne, 01732 471647
6th April 2017