Shawbrook Bank provide Heavy Refurb Bridging loan to convert run-down, single dwelling house into 6-bed HMO

16 September 2020

The specialist lender progressed the case to offer in the height of lockdown.

The case

Shawbrook were approached by Broker Partner Go Finance, seeking a short-term finance solution for their client planning to covert a single-family dwelling into a 6-bed HMO.

The property built in 1910, was noted as ‘significantly dated throughout’. Repairs and general maintenance had been neglected for several years and a substantial amount of work was required to modernise the property. Some of the works noted were, damp, external joinery repairs, potential ceiling asbestos, leak damage and an old boiler. Upgrades were also required to address a poor EPC rating.

Although the current state of the property would likely deter many buyers and renters, it’s desirable location near the town centre, meant there were no concerns around saleability, and rental demand should be strong following completion of the works.

Shawbrook’s solution

Taking into account the potential of the property once converted into a high yielding HMO and the experience of the customer with this type of project, Shawbrook were able to offer a £261,000 interest only Heavy Refurb bridging loan on a 9-month term at 75% LTV. Shawbrook was able to add the arrangement fee on top of the max LTV, rather than deduct from the gross loan resulting in a higher net loan amount for the client.

Outcome

With expert guidance from the broker partner and Shawbrook’s fast and flexible approach, the client secured the funds required to complete the purchase quickly and undertake the heavy refurbishment needed to transform the property.

The client secured the exit route to a term mortgage, enabling him to recover his deposit & the refurbishment funds spent, as the value had increased almost 40% from the purchase price. The fees & charges of the loan were added at inception, rather than on a monthly basis, therefore providing a better “cash-flow” throughout the project.

Shawbrook’s customer:

“As a first step into acquiring an investment property the advice & process with Go Finance & Shawbrook Bank could not have been more professional...even during lockdown! Having the comfort of working with market specific funders is essential”

Neil Moorhouse, Managing Director Go Finance:

“The process with Shawbrook from quotation to completion is extremely straight forward with market leading pricing which enables Go Finance to offer best in market products. Shawbrook are an extremely helpful Bank on all levels & offer great support to the intermediary marketplace.”

Gavin Seaholme, Head of Sales Property:

“Working with expert broker partners and delivering a good customer journey and outcome are key to providing bridging solutions. At Shawbrook we have an award-winning product offering with products that are aligned to our customers’ needs. Heavy refurbishment is a key product in this market as it offers customers the opportunity to maximise an assets potential”