Seventy percent net loan for new developer buying and converting London house to flats

Area
North London
Capital Raised
£836K

The Scenario

A five-bedroom house in North London for £840K? Our client – who didn’t have a lot of development experience – had found a great opportunity.

It was a three-storey Victorian property conveniently located between two popular tube stations. Our client could see the potential to convert it into three flats, with a projected GDV or £1.55M.

He was keen to get the ball rolling. He needed finance to cover both the property purchase and the refurbishment works.

He’d done his due diligence on the property, but hadn’t applied for pre-purchase planning permission (not wanting to wait the three months for planning permission to process). A lot of lenders won’t be comfortable lending on this basis.

He came to use wanting to know the maximum Day One loan he might be able to secure on an 18-month term.

The Solution

We knew the right lender to go to, who’d take an entrepreneurial view of this client’s experience.

We split the client’s borrowing into two loans:

1: An advance 70% net loan of £586 as a six-month bridge at a 0.79% rate, allowing our client to buy the five-bed property. 

2: and then a further £250K refurbishment loan (at a 0.78% rate) to complete the necessary works to convert the house into three flats.

This gave the client total of a £836 in lending, secured against the £1.55M value of the property.

Robert-Gibb-Quote-70-Percent-Net-Bridging-Loan-For-Flat-Development-In-London

The lending structure we sourced gave him the flexibility he needed going forward.

Once the planning is approved, the value of the property will go up. Our deal meant that he could then draw down 70% of the increase of the value to kick start the refurbishment works.

Also at this point, the lenders will extend that bridging loan for another 11 months - and give him a further loan for 250K. Both loans will be repaid on sale of the three flats.

By going with a lender who is happy to lend pre-planning permission, our client was able to act faster and negotiate a lower purchase price.

The total term for the two loans was 15 months, which gave him enough time to get planning permission, convert the flats and sell them – enjoying the profits from selling flats in the much-sought-after London market.

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.

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