Alternative Development Finance Solution for Unmortgageable Petrol Station

The Client: An experienced businessman who owned and ran a petrol station in the south of England.

The Property: The client owned the freehold for the business, as well as his own home for which he had a £414,000 mortgage. Both of these properties held a good amount of equity in them.

The Finance: The client needed to release equity to pay for some minor refurbishments to the business' property and to make general updates to the retail unit within, to ensure it remained a popular stop for customers. He wanted to release equity from the business property through remortgaging.

The Challenge: Despite providing evidence of the business’ strong profits the existing High Street bank, who loaned the original commercial mortgage with the business property as security, refused to remortgage the property and release the funds for the works. Many High Street banks are currently reluctant to lend to petrol stations as they are seen as too much of a risk. This left the client in a difficult position as, without the finance, they were unable to grow and develop the business.

The Solution: When the client came to us, we were able to approach a more specialist lender with his case. Rather than releasing funds through a remortgage, the lender agreed to grant a loan in the client’s personal name with a second charge over his residential property, but with the understanding that the funds were to be used for the business’ required works to strengthen the trading operation. Despite being in the client’s personal name, the repayments can be charged back to the trading business. The client was thrilled we were able to source an alternative solution, allowing him to receive the finance to make the required changes to the business and develop its future. Here are the details: