Refinance After Refurbishment
Loan Type: Commercial Mortgage
Loan Amount: £487,500
Lender: Shawbrook Bank
The clients in this case approached Bowman Finance with the intention of refinancing a bridging loan.
The 11-apartment freehold property, which was initially purchased in December 2021, was bought via Auction.
The client then undertook some refurbishment works, upping the estimated property value to £750,000.
We were able to put in place a commercial mortgage with Shawbrook Bank.
This will allow the clients to exit their current loan and release equity from the property in order to repay the directors who made the initial investment.
How we secured the clients the monies they needed…
Brokerplan’s Network Support Manager, David Fine Explains…
The clients had bought the property at auction for £451,500 and then had put in circa £90k of works to refurbish it.
They were advising us that it was now worth £750,000 and they wanted to borrow £510,000 – effectively taking almost all of their money out of the project with the refinance. That was a huge step up in value.
Generally, we find that surveyors do not value a property at much more than the project costs i.e. the purchase and refurb. cost of £541,500.
So a surveyor may give it a bit of an uplift to represent some added value but in this instance an uplift of say £600k would have been expected.
It’s highly unlikely for the surveyor to add £200k in value uplift.
If the surveyor did this then it would mean the clients would not have been able to take out what they wanted to; the LTV would be too high (510/600 = 85% LTV and the top end would be 75%).
As such, we had to persuade the surveyor the property was now worth the £750k and so we helped the clients compile a document that showed the works they had done with before and after photos. We also did work to show that comparable flats in the area were valuing as the clients wanted them to.
But most importantly, we advised the clients to meet the surveyor on site, chaperone him round, show him the works done and “spin” the property so that they saw what the clients wanted them to see.
This advice worked – the surveyor valued the property at £750k and subsequently the clients were able to take all of the monies from the property that they wished …. And move onto their next project.
The clients were very satisfied with this outcome, and gave the following testimonial on their experience:
Robert was very hands on and requested all the details of the property immediately and got to work, he got me two very favourable offers explained everything in detail. He guided us through the process with the refinance application, with a lot of work done from himself and us together we successfully obtained the refinance and it was great achievement especially having to re Bridge the property twice because of the short pool of providers of this specialist mortgage.
Robert has been great to work with and Highly recommended for any specialist property finance requirements, and I hope to work with him soon with my other property finance needs.“
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