2nd charge for heavy refurb, WD25
Client circumstances:
Our client required ÂŁ128,009 to undertake a heavy refurbishment on one of their rental properties which included a loft conversion, downstairs extension, and a renovation throughout.
The client was a British national based in the Middle East and they were planning to raise funds for the works by placing a second charge on another of their rental properties which had a value of £1,000,000. Planning consent had been granted and the client had started the process of securing the finances they needed via a high street lender. However, a recent change to the lender’s criteria meant they no longer leant to expats, leaving our client without a source of funds. Keen to ensure the project could quickly proceed as planned, their broker immediately contacted us.
MT Finance solution:
As an asset-based lender, we focus on the asset in question and the client’s plans for it. This enables us to lend to borrowers who would otherwise struggle to secure funds – such as expats – as long as the bridging loan makes sense. We knew that the client’s plans for their rental property would significantly increase both its value and the rent they could command.
One challenge we encountered was having the signing of the legal documentation witnessed by a pre-approved solicitor. As the client resided in Qatar, they were potentially going to have to fly back to the UK to do this, which could have been a costly and time-consuming process. We wanted to avoid any unnecessary delays, so the client met with a solicitor in Qatar who was able to act as a notary and witness the signing of the security documentation. This meant that the client saved time and money and the legal process was not held up in the interim.
Our underwriters and case managers worked closely with the valuer and the client’s solicitor to issue a second charge bridging loan of £128,009 against their additional rental property at 37.8% LTV of the value. Interest was retained at 0.75% over a 12-month term.
The benefits:
By taking out a second charge bridging loan with us, our client was able to proceed with the works as planned without facing any delays. Once complete, they will be able to command a higher rent due to the property’s increased square footage and improved interiors. They will then be able to refinance out of our bridging loan with longer term finance, against the property’s higher value. If this happens sooner than 12 months, then the client can redeem our bridging loan without facing any fees or ERCs.
