Covering an existing charge while also investing in a commercial property

Loan Amount:
£450,000

Property Value:
£784,000

LTV:
56%

A borrower required our funding to help with a complicated investment in a commercial property, while also covering an existing charge.

The property, while in need of some modernisation, held a lot of potential. It could generate relatively high rents from tenants, and may also have been sold on fairly quickly should the need arise.

But, while the property was solid, it was the borrower’s background which potentially may have held back the investment. Our underwriter had to go through each of the issues to find a way forward.

Dealing with missed payments

Some years prior, the borrower faced challenges in their finances. In analysing their details, we found they had missed several payments with external vendors and service providers. Fortunately, we found that these were isolated incidents, despite occurring relatively close together. The borrower’s current credit record was clean.

Also, they had a CCJ in their background. But, we discovered that this CCJ was disputed and was essentially written off from their record by the time they approached us.

The borrower was clearly very organised with their affairs and, with a thought-out refinancing exit strategy at the ready, we were confident the investment sat on solid foundations.

Looking beyond the blips

Financial challenges – such as missed payments, CCJs, and bankruptcies – can be devastating for any property investor. Even where they may not be entirely fair, or have already been resolved.

A person’s credit history can follow them for a long time, often emerging at the most inconvenient time during an investment process. And with arrears expected to rise to 128,800 cases by the end of this year, chances are many property investors could see their plans upended over the coming months.

Fortunately, MFS understands that investors are more than just their latest credit report. We know that investors have plenty to offer the wider economy, even with defaults, IVAs, hefty liabilities or anything else to their name. No matter how challenging your cases may be, we want to help you find a way forward.