The client

Our client wanted to arrange finance to repay the bridging and development finance which had been arranged on her split commercial/residential property purchase which we wrote about last week purchase-of-a-commercial-premises-and-flat-without-planning-permission-followed-by-refurbishment-funding-to-convert-residential-into-two-further-flats.

If you are refurbishing or rebuilding a residential or commercial premises, or building one from scratch, then you may well need development finance. There is a wide choice of specialist development lenders offering a range of products to investors at competitive rates. Finding the most competitive terms can be tricky if you don’t know where to start, which is where a whole-of-market broker, such as AWS, can assist. We enjoy good relationships with these lenders and have expertise in arranging development finance. We can identify the right development finance for your needs on competitive terms, guiding you through the process from start-to-finish.

The property

Now that the development of three flats above and to the rear of the commercial premises had been completed, we needed to arrange a long-term finance package as the bridging finance was due to be repaid after 12 months. The combined property value was £650,000 and the client required a loan of £455,000, giving a net loan-to-value of 70 per cent.

Key requirements: –

A lender comfortable with a commercial property split with three residential flats above all on separate assured short hold tenancies (ASTs).

But, a lender comfortable with lending to a client with no previous commercial landlord experience. Lending on an interest-only basis.

After sourcing the mortgage market, we identified a lender. Who would agree to lend our client the full £455,000 on an interest-only basis.

The application process

In other words, to support the mortgage application, the client supplied us with proof of identity and address. The lender also required her last two years’ annual accounts and tax calculations. A copy of the commercial lease and her last three months’ bank statements to evidence rental income.

Property value: £650,000 Loan amount: £455,000 LTV: 70% Rate: 5.05% fixed for five years Lender completion fee: £9,100 Monthly payment: £1,953.09