Discover how we helped an experienced portfolio landlord with no cash deposit successfully secure a £685,000 loan at 120% LTV to convert two leasehold flats into a family home in a sought-after tourist area.
At a glance:
- An established portfolio landlord with relevant refurbishment experience
- Two flats in a busy tourist area on the south coast in need of significant refurbishment
- The client had no deposit but significant equity in their own home
The Case:
Our client had worked with us on several investments in the past, having built up a strong portfolio of eight buy to let properties. With some refurbishment experience already under her belt, she was looking to purchase two leasehold flats on separate titles, plus the property’s freehold, to convert into a family home.
The old Victorian townhouse is located in a popular area with high demand for rental properties, so our client was confident this would generate substantial tenant demand. However, with issues surrounding the lack of deposit and the complexity of the conversion, this was a challenging case to place.
The Challenge:
The primary challenge was our client’s lack of deposit, restricting the pool of lenders we could approach with this case. Furthermore, a traditional mortgage lender could not consider this refurbishment project, as our client wanted to convert two separate titles into a single dwelling.
Our expertise and knowledge in this complex area of property finance meant we quickly identified a suitable solution to the deposit challenge. We approached a lender we knew could consider the case and arranged a bridging loan with a second charge against her own home. With a property value of £2.2 million, the client’s home had a remaining mortgage of £650,000. This, alongside the property in question, meant our lender had sufficient security to proceed with the application. What’s more, the original mortgage on her home was intact, so our client faced no hefty early repayment charges.
As well as providing the lender with a clear exit strategy of a buy to let mortgage once the works were completed, our knowledge of the bridging market meant we prepared all the documents the lender would require before submission. We also supplied the schedule of work and full costings to help proceed with the application as quickly as possible.
With all the challenges overcome, the expected completion time for this case will be just seven weeks from our client’s initial application.
The Finance:
Property value: £585,000
Loan amount: £685,000
LTV: 120%
Cost of works: £100,000
Gross development value: £1,000,000
Term: 25 years, interest-only
Monthly mortgage payment: £1,136
Lender arrangement fee: 2% (£4,760)
*Rate as at August 2024.
Next steps
For further information on financing renovations you might find our Guide to Financing Home Renovations blog useful.
If you have a similar project you would like to discuss, get in touch with one of our team.
