The clients: A married couple – both professional property developers with a large portfolio of successful residential developments.
The couple have been developing properties for selling and renting out over the past 14 years – this is their full-time occupation and only source of income.
The project: The couple had purchased a large plot of land in Norfolk for the development of a housing estate back in 2010 – this is owned outright. They had already completed the build of 41 houses on the site and sold them on prior to contacting Mortgages for Business for further finance.
They needed development finance for the construction of an additional three detached homes on the same estate. Instead of selling the properties, this time the couple planned to refinance them onto a buy to let mortgage and rent them out, each for £2,000 a month.
They were keen to receive the funds within two months, so that they could continue with other development projects already in their pipeline.
The finance: They were looking to borrow £500k through their limited company to cover the entire cost of the build, which is not something many lenders will consider.
We approached a lender who we thought may be able to help. It offered to lend the full amount within six weeks. Here’s why:
• The developers already owned the land on an unencumbered basis
• They had been granted planning permission and were able to provide the necessary documents
• They were able to provide the contractor’s accounts to prove they had carried out a project of that
• They were experienced developers who had successfully built and sold properties in the same area
• They were able to provide a premier guarantee from the architect and structural surveyor
The clients were formally offered the following terms:
Land purchase price: Already owned
Build costs: £500,000
Gross development value: £1,000,000
Loan facility: £500,000
Term: 18 months
Facility fee: 2% (£10,000)
Exit fee: 1% (£5,000)
Consultant: Peter Barnes, 01732 471641
29th February 2016