01206 544333
The Client’s Situation
Our client approached us as they had secured a semi-commercial property at auction and had 20 days for the purchase to complete. The property comprised a 7-bedroom HMO and one commercial unit. At the time of purchase, the property was:
-
Fully vacant
-
Without a HMO licence
-
In need of light refurbishment and general tidying
The auction purchase was funded using a bridging loan at 75% LTV. The initial valuation agreed with the purchase price of £261,250, and the valuer also projected that the gross development value (GDV) would be £350,000 once the works and licensing were complete.
.
The Challenge
Auction purchases have 20 working days to complete, meaning we had to proceed quickly.
.
Our Solution
We were able to secure a bridging loan at 75% LTV, which allowed the client to purchase the property.
Two months later, the client had:
-
Completed the necessary works
-
Secured the HMO licence
-
Fully tenanted the residential units and commercial space
At this point, they approached us to refinance the bridging loan onto a semi-commercial mortgage.
A new valuation was carried out, and due to the improved condition and strong rental demand, the property was now assessed at £375,000 – an uplift of £25,000 from the projected GDV.
.
The Result
With the new valuation of £375,000, we secured a 75% LTV semi-commercial mortgage of £281,250.
This result meant:
-
The refinance raised £20,000 more than the original purchase price
-
Effectively achieving 100% finance on the acquisition
-
The client now owns a fully licensed property, currently achieving £60,000 per year in rental income across the HMO and commercial unit.
- Bridging loan secured property within 1 month and the refinance onto a commercial mortgage with the same lender took just 1 month once the works were completed
Client Feedback
“Advocate Finance found us a great deal to bridge while we prepared and tenanted the property. Three months later, we received our valuation of £375k and moved it onto a mortgage product with the same lender. Our mortgage provided us with £281k, which enables us to take all our initial capital out.
We are super pleased with this deal and Advocate’s Finances’ involvement in making everything run so smoothly”
How can Advocate Finance help?
Have you found a property which you need bridging finance to secure? Advocate Finance can arrange this for you, as well as the refinance once you have completed the works.
We provide a FREE assessment on all our services.
Please contact me directly for more information, or use the Get in Touch With Us Today feature at the bottom of this page.
