Providing a 2nd charge for a renovation project

Taking a 2nd charge for a renovation project

Loan Amount:
£120,000

Property Value:
£720,000

LTV:
49%

Property investors capital raise for a broad range of reasons – to consolidate debts, or generate funds for another investment. One borrower turned to us to capital raise for a renovation project.

The borrower was coming to the end of their project, and found themselves in need of funding for the final bits of work. As such, we had to move quickly to ascertain whether we could accommodate the borrower’s needs.

Our underwriter got to work in determining that both the security property we were raising funds on, and the separate property being worked on were suitable for our criteria.

Factoring the complete picture

Given the tricky renovation plans involved, we gathered a detailed schedule of works for the project. This allowed us to assess the project thoroughly. Also, as we do not provide ground up development finance, our underwriter had to review the paperwork involved and structure the deal in a certain way so we could accommodate the works involved.

We also factored in the borrower’s background. We could see that they had been in the property industry for several years, and this type of project was in line with their business activities. This reassured us further that the deal was on a solid foundation.

To simplify the deal and provide the borrower with additional flexibility, the underwriter also utilised fully rolled interest to help with the refinancing exit strategy.

Property investors need to ready their assets

We may see more demand for refurbishment and/or renovation finance over the coming months. Both Awaab’s Law and the Renters’ Rights Bill are on their way, and each will force much higher standards in the BTL market.

The ongoing trade war news won’t make things any easier either. As the economic and political landscape looks increasingly unstable, we’re likely to see mainstream lenders tighten their lending criteria, which they’ve been known to do in the past.

We know what property investors need during times like this is stability, and flexibility. At Market Financial Solutions, we’ll continue to provide both.