- Client: British National & Resident
- Property: 5-bedroom house in London
- Purchase price: £932,000
- GDV: £1,500,000
- Total loan: £980,000
- Structure: 75% LTV purchase loan with 100% refurbishment funding
- Rate: 0.73% per month, fixed for 18 months
Enness was approached by a British client looking to purchase and refurbish a five-bedroom property in London. The property was being acquired for £932,000, with refurbishment works expected to cost a further £215,000. Once completed, the gross development value (GDV) was forecast at £1.5 million.
The client wanted to maximise the available funding for both the acquisition and the works, rather than committing a significant amount of additional capital to the refurbishment. This required a lender that could look at the entire project and structure the finance around both the purchase and the anticipated end value.
Enness approached a specialist lender with experience in property development finance. The resulting structure provided 75% LTV funding against the purchase price, together with 100% funding for the planned refurbishment works.
The refurbishment element was arranged to be released in five staged payments as the works progressed. This meant funds could be drawn in line with the development rather than all being advanced upfront, providing a structure aligned with the project’s cash-flow requirements.
The total facility was £980,000, with a rate of 0.73% per month fixed for 18 months and a 2% lender fee. The structure gave the client the funding required to acquire the property and complete the planned works, while the projected £1.5 million GDV provided the lender with a clear view of the anticipated completed value.
For development projects, lenders will typically consider factors such as the experience of the developer, the proposed works, GDV, the underlying security and the contractors involved. Having a finance structure that reflects these factors can be particularly important where the borrower wants to maximise funding for the works.
This case demonstrates how property development finance can be structured around both the acquisition and refurbishment of a property. Enness can assess the proposed project, understand the funding requirement and approach specialist lenders capable of considering the wider circumstances.
If you are planning to purchase and refurbish a property and need funding for both the acquisition and works, speak to Enness about your development finance requirements.
Risk Warning:
Property development finance carries risks. Development costs can increase, projects can take longer than expected and the completed property may be worth less than anticipated. Failure to meet the terms of the facility could result in the lender taking action against the secured property or other assets.
Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal or tax advice. Finance is subject to status, underwriting, project assessment and lender criteria. Terms and availability will vary depending on individual circumstances and the proposed development.
Information contained in our case studies is for market and illustrative purposes only. In some cases, these may be made up of multiple cases and are for illustrative purposes only.
Some case studies are made up of enquiries that have come into the business, not all business completes, and the posting of a case study does not represent a completed piece of business.
Property values can fall as well as rise, and you may not get back the amount originally invested. Property investments can be illiquid and may take time to sell. Where borrowing is used, your property may be repossessed if you do not keep up repayments on a mortgage or other loan secured against it.
