All our deals go through rigorous due diligence, which becomes especially important when larger cases present themselves. A property investor approached MFS via a company for a large loan to expand their portfolio.
The borrower wanted to purchase two flats in a prime location. Being a stone’s throw away from a number of key London locations, such as Regent’s Park and multiple tube stations, the flats held a lot of long-term rental potential.
To ensure the investor didn’t miss out on the opportunity our underwriter went out of his way to ensure there was plenty of security for the loan.
Financial security remains paramount
The properties being invested into were spacious, being made up of five bedrooms and other features. While the flats remained empty, our valuation efforts showed they had the potential to bring in rental income stretching into the six figures.
Given the income returns could be so high, we moved quickly to lock in the deal. As we were lending to a company, our underwriter took the extra precaution of taking a security charge via companies’ house. Additionally, personal guarantees were given from the main shareholder and director within the firm.
Additionally, we reviewed the client’s exit strategy plans. As the borrower was already in talks with several banks to establish refinancing, and considering they already had a vast property portfolio, we were happy to issue the loan.
The prime market is booming
Despite the current state of the economy, demand for larger homes in prime locations is on the up. In Q2 2022, prime rents rose at a rapid rate, according to Savills. In London alone, a recovery in the prime rental market has led to the strongest annual growth seen since 1998. Higher even than the recovery seen following the 2008 financial crisis.
This demand, coupled with the fact that property prices are also skyrocketing, means investors and landlords are likely to need ever larger loans for the months ahead. Here at MFS, we’ll be able to meet that demand, with large bridging loans of up to £50m available within mere days.