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The Client’s Situation
A father-and-son building team (experienced in large extensions and new build projects) owned a 3-bedroom semi-detached house, with a large side plot which already had planning for three new-build bungalows and was partially constructed up to damp-proof-course (DPC). The existing dwelling was the client’s residence with an outstanding mortgage.
The Challenge
They required development funding to complete the build of three new bungalows. Key facts:
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Total build cost required: £680,000 (at £140 per sq. ft)
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They had already spent £150,000 on works.
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Land “day-one” residual value was £300,000; Gross Development Value (GDV) upon completion was £1.1 million.
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They also needed to repay their existing mortgage, freeing up cash flow.
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The original quote for regulated loan product was at 1.25 % per month; the aim was to secure better terms.
Our Solution
We analysed the structure and determined that because the client’s dwelling occupied less than 40 % of the total plot, the development could be classified as unregulated, unlocking a wider lender pool and lower pricing.
We secured funding at 0.75% per month, comprising:
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A day-one term loan of £153,659 to clear the existing mortgage.
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A drawdown facility of £530,000 to fund the remaining build costs.
Based on the total gross loan (including build cost and interest), the client was projected to realise a profit of 34%.
The Result
The development funding enabled the client to complete the three new bungalows, restructure the original dwelling’s mortgage burden, gain fully independent units at GDV, and secure a better cost of finance, significantly improving projected returns.
Client Feedback
“Thanks for your help and a big thank you for being 1st class all the way through”
How We Can Help You
If you’re planning a new-build development or site conversion and need acquisition, build cost funding or long-term refinance, Advocate Finance can structure the debt appropriately, advise on regulatory classification and access lenders prepared for complex development projects.
