Scenario:
The clients fixed rate was fast-approaching and they were looking to lock into a new fixed deal. At the same time, they wished to raise £500,000 on top of their existing mortgage to cover building works following their successful planning approval. The total project was estimated to cost around £1m however the client had cash to fund half of the works.
Challenges:
Traditional lenders are very cautious when it comes to large renovation projects such as this one as their main concern is the value of the asset whilst the works are being carried out. They often want to see full details of the works including planning, costings and breakdown of works. In this case, the works were extensive and meant the clients would have to rent another property to live in, the cost of which also had to be factored in.
Solution:
The client was able to show full planning permission, drawings, schedule of works and professional builders quotes. This added to the strength of the clients financial situation including their ability to afford both the mortgage and rent at a different property allowed us to source a competitive fixed rate with a high street bank. Furthermore, the loan was granted on a full interest only basis which would help with cash flow during the course of the works.
Key figures:
Property value: £4 million
Loan amount: £2.5 million
Repayment type: Interest only
Product type: 2 year fixed
Interest rate: 4.2%