Refinancing property development in adverse circumstances

Area
Croydon
Capital Raised
£2.1M

Sometimes, in property development, Finagle’s Law applies. This is an addendum to Murphy’s Law, that invaluable stress-test which can usefully be applied to all development financing ("anything that can go wrong, will go wrong").

According to Finagle’s Law, whatever can go wrong will go wrong at the worst possible time...

The Scenario

Our client had a number of property investment successes to her credit. Her latest scheme was six new-build terrace houses in South London valued at just under £3M. But the project hit the buffers when her builder liquidated.

A series of adverse circumstances then collided: she missed a couple of payments on her lending, her father fell ill and she had to travel overseas, and she had a late payment on a secured loan against her own home.

She needed to raise at least 75% of the value of the six houses to cover the various loan costs and get the project completed.

The Solution

Missing a secured loan repayment is the cruncher: lenders usually won’t consider such borrowers for a minimum of a year, usually three years.

Our client had considered selling one or more of the properties, but had been unable to achieve an acceptable sale price within the time frame. Considering the rental option, we were able to demonstrate that the projected income from the six properties would cover the costs of buy to let mortgaging, and also recoup her additional costs.

Our approach was to split the borrowing, to reduce the lenders’ risk. We secured finance for two of the houses with one lender at 80% LTV, and financed the other four houses with a second lender at 75% LTV.

Our client had the funding in place to complete the project and have the properties earning an income, until such time as her credit record had cleared and she was going to be able to sell the properties at a reasonable price to fund her next development.

Jack Spillane

Finance Broker

Bristol

0117 959 5094

Is your situation similar to this? I specialise in helping clients who need creative development finance solutions, and second-charge mortgages. Give me a call any time and we can set up a detailed discussion of the finance you need.

Mathew Phillips

Finance Broker

Bristol

0117 959 5094

Are you in a similar situation? I specialise in bridging finance at Clifton Private Finance - I will find you the best funding solution for your property transaction.

Alex Chambers

Senior Finance Broker

Bristol

0117 403 4324

Are you in a similar situation? I am a specialist in residential and investment property finance for UK and international clients at Clifton Private Finance. Please don't hesitate to get in touch for a no-cost discussion of the finance you need.

Luther Yeates

Senior Finance Broker

Bristol

0117 244 5561

Are you looking for a similar type of property finance? I have extensive experience finding residential and investment property finance for UK and international clients. Please get in touch and we can arrange a time that's convenient for you to discuss your situation.

Sam ONeill

Senior Finance Broker

Bristol

0117 959 5094

Is your situation similar? I am a bridging finance specialist at Clifton. I can find a quick, cost-effective solution for the funding you're looking for.

Robert Gibb

Senior Finance Broker

Bristol

0117 959 5094

Are you looking for mortgage or short-term finance for residential or buy-to-let property (including HMOs)? I have extensive experience in finding property finance solutions for UK and international clients, both as individuals and limited companies. Please give me a call and let me see what I can do for you.

Adam Arnott

Associate Director

Bristol

0117 205 0214

Is your situation similar to this? I have extensive experience of advising clients who need creative property finance solutions. Please get in touch and we can arrange a time that suits you for a detailed discussion of your requirements.

Contact Us