Super Fast Auction Finance for HMO Refurbishment Project During Spring Lockdown

Super Fast Auction Finance for HMO Refurbishment Project During Spring Lockdown

16.12.20 | Written by: Robin Tait

The Clients: Purchasing through their limited company, the two directors were experienced landlords looking to expand their already extensive buy to let portfolio. Both directors were full-time self-employed.

The Property: Our clients wanted to purchase a four-bedroom Victorian terrace at a property auction. In addition to cosmetic improvements, our clients intended to convert the property into an HMO to maximise their yield. Situated on the outskirts of London, tenants would have access to excellent local amenities and transport links to the capital. 

The Finance: While our clients had the capital required to complete the refurbishment, they needed a 70% loan to value bridging loan to complete the purchase.

The Challenge: Having won the auction bid for the property, our clients needed finance to complete the purchase in less than a month! While there are bridging lenders set up to meet these short timeframes, we opened this case during the first national lockdown. Consequently, many lenders had restricted their criteria or withdrawn from the market entirely and were taking far longer to process applications as they adjusted to working from home.

Furthermore, our clients were mindful that further restrictions or lockdowns could delay the refurbishment works. They were concerned the property might not be ready to refinance onto a buy to let mortgage at the end of a 12-month term, and the financial implications of this. Not only would we need to find a lender that would accept the application and be able to complete in time, but we’d also need to negotiate an extra clause with them due to the COVID-19 circumstances.

The Solution: After carefully examining our client’s circumstances and requirements, we approached a niche bridging lender that was not only competitively priced but also able to complete within the desired timescales. Quickly collecting all the necessary documents from our clients, we were able to package up and submit the application.

We received the initial terms within a matter of hours, and the valuation completed within 48 hours! We then spoke to the lender directly about our clients’ concerns regarding potential delays due to the pandemic; understanding, they agreed to an additional clause which would extend the facility should works be impacted by the pandemic. Delighted with the terms, our client was able to obtain the finance quickly, complete the purchase and start the project. Here are the details:

Property value: £656,000

Loan amount: £459,200

LTV: 70%

Rate: Fixed at 0.7% per month

Term: 12 monthsinterest rolled up

Lender arrangement fee: 2% (£9,184)

Application: SPV Limited Company

Consultant: Robin Tait, 01625 416391

ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

NB: ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

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