Purchase and development loan to transform two neighbouring properties into HMOs

Funded:

£315,000

Property Type:

Commercial

Funding:

Bridging Loan, Development Finance

The Project

The Client approached us seeking a purchase and development loan to transform two neighboring properties into HMOs – a 6-bed and a 3-bed. The purchase price was £150,000, and the gross loan offered was £315,000.

The Approach

We structured the loan with 70% LTV on the property purchase, releasing £83,000 on day one and allocating £182,000 for build costs. The expected GDV after refurbishment is estimated at £450,000, with an LTGDV of 68%. Our solution provided the necessary funds to support both acquisitions and developments.

The Outcome

The loan was completed in September 2024 with a 12-month term. This funding allowed the borrower to efficiently proceed with their development, targeting a significantly higher property value post-refurbishment.

Bridging Loans – Key Features

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  • Fast Decisions: Initial responses typically delivered within hours—perfect for time-sensitive situations like auction purchases.
  • Loan Size: £100,000 – £2.5 million.
  • Loan-to-Value (LTV): Up to 75% of the end value (Gross Development Value or market value), with flexibility available on a case-by-case basis.
  • Desktop valuations are available
  • Term: Usually up to 12 months, but occasionally longer if LTV can support it.
  • Interest Roll-Up: Interest can be “rolled up” and repaid at exit, easing cash-flow pressure during the loan term.
  • Interest Serviced: Interest can also be “serviced” allowing a larger day 1 cash drawdown (subject to serviceability).
  • Exit Strategy Required: Clear repayment strategy—such as sale or refinance—must be established at the outset.
  • Security: First legal charge on the property is required.
  • Transparent Costs: Arrangement fees typically start at 1%. No early repayment or exit fees, and no hidden admin charges.
  • Unregulated Product: these Bridging loans are not FCA-regulated, they are not available for owner-occupied residential properties.
Learn more about our Bridging Loans

Development Finance – Key Features

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  • Comprehensive Coverage: Funds typically cover land purchase, professional fees, and build costs.
  • Staged Drawdowns: Capital is released in phases, usually against certified expenditure.
  • Tailored Structures: Designed around project timelines, often short- to medium-term in duration.
  • Market leading LTV’s up to 75%.
  • We typically fund 75% of land purchase costs and 100% of construction/development expenses
  • Loans from £100,000 to £2,5m.
  • Expert Team & Relationships: We work with expert surveys who work closely with Developers to ensure funds are delivered promptly through the construction phase aiding cashflow.
  • Transparent and Responsive Service: With fast decision-making and clear dialogue, we support borrowers from initial enquiry through to delivery and repayment.
  • Unregulated Product: these Bridging loans are not FCA-regulated, they are not available for owner-occupied residential properties.
Learn more about our Development Finance

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