Funding the conversion of a house into two flats, N11
Client circumstances:
Our clients were siblings who had inherited a three-bedroom residential property 14 years ago. They have been renting it out as an entire home ever since but, in a bid to increase their rental income, they recently decided to convert it into two self-contained flats. Planning had been granted and works had already begun but the clients had run out of money and they urgently needed a cash injection to fund the extensive renovation. Eager to avoid further disruption, their broker got in touch.
MT Finance solution:
As our clients had no mortgage and the property was completely unencumbered, we were able to consider a relatively low loan-to-value which would still provide the siblings with the money they needed to finish the works. As well as converting the house into two flats, they were undergoing a ground floor extension and loft conversion, and also implementing sound proofing. Once we had received all necessary paperwork and legal documents, we issued a first charge bridging loan of Ā£120,000 at 38% LTV of the propertyā€™s Ā£315,000 open market value. The term was set at 12 months.
The benefits:
Thanks to our ability to move quickly, our clients were able to continue with the renovation without facing a substantial delay. They now have up to 12 months to complete the works and get the properties ready to rent out. They will then obtain a buy-to-let mortgage on each flat, allowing them to exit out of our bridging loan. If this happens before the end of their term then they wonā€™t face any early repayment charges or exit fees. With the new mortgages in place they will be able to substantially increase their rental income.
Find out more:
If you are considering renovating a property or changing its use, we can help. Lending decisions are usually made within hours of an enquiry and funds can often be released in a matter of days. Drop us a line to find out more.
