Client: A broker with no knowledge of the care sector approached us to source finance for his client, a registered care home owner with more than 25 years’ experience.
Property: A seven-bed Victorian house in the Midlands which the client owns personally. It is registered and run by the client as a home for people with learning disabilities. The client runs the business through a limited company which pays him rent for the property.
The Business: The client successfully trades the home which turns over around £250k a year and generates profits of c£74k. However, after a statutory inspection in 2016, a Care Quality Commission (CQC) report raised a few minor issues which the client subsequently addressed.
The Finance: The client was looking to raise £210k of capital on the home to repay an expensive bridging loan which he had used to buy out a former business partner from the limited company.
We approached the business development manager of a high street bank with which we have successfully placed similar deals in the past to discuss the case. After an initial assessment, the she referred the case onto a local relationship manager who is situated closer to the home.
In the meantime, we worked with the broker and his client to put together a proposal for the lender which included:
- Trading accounts for the last three years
- Latest two years’ CQC reports
- Latest six months’ business and personal bank statements
- Up to date occupancy schedule with relevant management information
The bank manager then visited the home and the client to discuss possible terms – the client was keen to secure a 10-year fixed rate. Both the home and the proposal passed muster with the manager who confirmed that the bank would be willing to lend subject to the property passing both a valuation and the CQC re-inspection which was scheduled for late 2017.
Confident that the home would pass the CQC inspection, the client gave the go ahead for the property to be valued. The valuation report confirmed that the property was good security for the requested loan.
A nervous wait of a few weeks followed, then in January, the client was delighted to receive a report confirming that the home has passed the reinspection.
We then worked with the broker, his client, the bank and the legal representatives to ensure that the mortgage application was processed through to completion. Here are the details:
Property value: £400,000
Loan amount: £210,000
Rate: 4.63% 10 year fixed
Term: 15 years’ capital and interest
Lender arrangement fee: 2% of loan amount (£4,200 added to loan)
Mortgage payment: £1,661 pcm
Consultant Mortgage Broker: Andy Elley, 01732 471 644
7th February 2018