Our client,an experienced property developer was the chairman and a major shareholder in a property development firm. Although he was overseeing a number of schemes through the business, the opportunity had arisen to develop a barn on the grounds of his home.
As the client was looking to downsize and wanted to sell his property, he was keen to ensure he achieved the highest possible sale price. This would leave him with a strong nest egg to enjoy in retirement.
The property was located in a premium location with limited housing stock coming to the market, meaning demand for the finished product was very high. The location of this property was particularly appealing as it was located within a large pocket of land, meaning it benefited from a large garden and no neighbours.
The transaction involved splitting the title to release the barn and surrounding land from the main house. The barn was then transferred to an SPV (Special Purpose Vehicle) Ltd. company, which was used to manage the development.
This made the transaction more complex, as the property that was security for the loan was taken from a larger plot, which had previously formed part of the client’s main residence.
The Key Requirements
| Development Costs: | £850,000 |
| Repayment of Existing Loan: | £150,000 |
| Total Loan Required: | £1,000,000 |
| GDV: | £2,250,000 |
Solution
We approached a market-leading development finance lender and due to the client’s strong track record, they were comfortable with the risk. As such, we were able to issue terms very quickly.
ABC Finance Ltd. secured funding for the project at 100% of build costs, allowing the client to proceed without the need for a deposit at a rate of 7% per annum. The loan was offered with rolled up interest, meaning there were no monthly repayments for the client during the project.
The client was delighted with the loan terms available and the application was able to rapidly move forward to completion.
About The Author
This content was produced by our Commercial Lending Director, Gary Hemming. Gary has over 15 years’ experience in financial services and specialises in bridging loans, commercial mortgages, development finance and business loans. He is widely respected in his field and regularly provides expert commentary for specialist trade publications, specialist business press as well as local and national press.
Gary Hemming CeMAP CeFA CeRGI CSP -
Commercial Lending Director
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