The Clients: A married couple with no commercial or property investment experience came to us looking to purchase a takeaway premises.
Six months ago, the couple had been approached by a close friend and asked if they were interested in taking on the management of a fish and chip shop. Their friend and current manager had agreed to work alongside the couple for a few months to help with the handover.
The couple had originally planned purchase to purchase the leasehold, however falling in love with both the business and the property the couple decided it would make financial sense to purchase the freehold.
The couple also run their own design consultancy.
The Property: The semi-commercial property is located on a busy high street in Derbyshire. The ground floor is a fish and chip shop and the second floor is a one-bed flat. The couple plan to move into the flat above once they purchase the freehold.
The Finance: The couple were looking for a commercial owner-occupier mortgage of £130,000. Unfortunately, due to the couple’s lack of experience not many lenders would be willing to take a view on the case.
For this reason, we needed to approach a lender which would be willing to manually underwrite the deal and take a view based on the couple’s business plan and low loan to value required.
The Application Process: Before approaching a lender, we worked with the client to produce a business plan to support the application. The business plan included:
- Details on key personnel
- An assessment of local competition
- Supplier details
- Product positioning
- Marketing and sales initiatives
- Projected balance sheet
Once complete, we set up a meeting with a business manager from one of the high street banks to discuss the case in detail. Happy with the clients, their business plan and the fish and chip shop’s previous trading accounts an offer was made within a month of submitting the application.
Here are the details of the deal:
Property value: £305,000
Loan amount: £130,000
Rate: 4.17% term tracker (3.67% + Bank Rate)
Term: 15 years capital and interest
Lender arrangement fee: Nil
Mortgage payment: £940
Consultant: Peter Barnes, 01732 471641
24th April 2018