Case Study 1: Refurbishment & Development Loan

A client approached us as he was currently defaulting on a bridge loan and needed to urgently redeem this but also raise additional funds to complete a refurbishment and development.

The borrower was a company which specialised in refurbishments and developments for onward sale of low-to-medium value property. The security was a corner site, 1 half of which was partly derelict, with an operational bakery on the ground floor, and the 2nd half had been demolished and had finally just had the planning granted in order for a 2nd commercial unit to be built with 6 x 2 bedroom apartments to be built across the upper floors of both plots.

The borrower had a CCJ from a previous business transaction but we didn't make this a reason to not fund, instead just increased the loan size to give him the required funds to clear and made it a condition of the loan.

We contacted the current lender whose loan was in default, and due to our relationship with them, they agreed not to proceed with legal proceedings against the borrower as they knew we would sort the refinance. Once we thought we were nearing completion, another issue occurred - we found part of the security we had been offered was in fact in a SIPP fund, and this particular pension fund did not allow for loans to be secured; not to be deterred and to ensure the borrower could release enough funds to complete the build, he was happy to use the equity in his home for additional security.  We completed to redeem the borrower's current loans and raise him enough to have the development built.

The refurbishment is expected to be completed within 3-6 months, once complete 4 of the flats will be sold to redeem our loan and fully complete the development of the apartments, 4 of the 6 have already been sold off-plan, giving us a high level of comfort for redemption.

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