Capital Raise for Self-Build Family Home

• Client: Senior investment banking professional
• Project: Self-build family home in Kent with a projected completed value of approximately £2.95 million
• Challenge: Required alternative funding after the planned sale of another property was delayed, with finance needed within four weeks
• Finance: Private banking facility secured against the development land and existing main residence

Financing a self-build project can become particularly challenging when a planned source of funding is unexpectedly delayed. Enness was approached by a senior investment banking professional who was looking to raise capital to build a new family home in Kent.

The client owned a plot of land valued at approximately £1.475 million, with the projected value of the completed property estimated at around £2.95 million. The intention was to develop the site into a high-quality family home, but the project required funding to be arranged quickly, with the client needing access to the facility within approximately four weeks of the initial enquiry.

The client already owned two other properties, including their existing main residence. The original plan had been to sell a separate holiday property and use the proceeds to contribute towards the self-build project. However, the sale was delayed, creating an immediate funding gap and putting pressure on the planned development timeline.

Enness reviewed the client’s wider financial position and identified a private bank prepared to take a more flexible approach to the proposed security. Rather than relying solely on the value of the development land, the lender was willing to take the land and the client’s existing main residence as combined security.

Accepting land as part of the security package provided an important solution, as not all lenders are comfortable lending against development land before construction has progressed. Combining the two assets also meant the client could apply for a single facility rather than arranging separate borrowing against each property.

The structure also provided flexibility around how the funds were accessed. Rather than advancing the entire facility immediately, the private bank provided an overdraft facility that allowed the client to draw funds as required during the project. This meant interest was only charged on the amount actually drawn, subject to the terms of the facility.

Enness was also able to negotiate a discounted interest rate for the facility, helping to manage the cost of borrowing while the client progressed with the self-build project.

The resulting structure provided an alternative source of capital when the planned property sale was delayed, while the combined security arrangement gave the lender sufficient comfort to proceed. The four-week timeframe also demonstrated the importance of having access to lenders experienced in handling complex property development finance requirements.

The case highlights how self-build mortgages can require a more bespoke approach where a project involves development land, multiple properties and changing funding requirements. For clients undertaking a high-value self-build, specialist large mortgage expertise can help identify financing structures that take account of the wider financial position and the specific requirements of the project.

Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal, tax or investment advice. Finance is subject to status, underwriting, affordability, valuation, property suitability and lender criteria. Terms, rates, LTVs and availability may vary depending on individual circumstances.

Risk Warning:
Your property may be repossessed if you do not keep up repayments on your mortgage or other borrowing secured against it. Property values can fall as well as rise. Self-build and development projects can also be affected by construction costs, delays, planning requirements and changes in property values. Borrowers should ensure they have a suitable strategy for meeting their financial commitments throughout the project.