Refurbishment Bridging loan to acquire & refurb a house in Harrogate

Deal Structure

98% of the purchase price on Day 1.

Then 100 % of total works costs, in 2 further tranches.

48% Loan to Value, using an additional security property.

Interest Rate at 0.85% per month, with interest retained.

2% Arrangement Fee

No exit fee

12 months term.

Deal Summary

Our clients had agreed to purchase a residential property in need of quite an extensive refurbishment. Given the extent of works required, and considering that the borrowers had limited experience, a fixed price contract was agreed with a local builder. The build programme was agreed, enabling a draw-down schedule to be put in place with the lender on a refurbishment finance bridging loan.

The clients borrowed 98% of the purchase price of the property, using the equity from another property they owned. The lender took a first charge over the property being purchased, and a second charge over their existing property, to enable such high leverage. It was also agreed that 100% of the build costs would be funded in arrears, in 2 tranches.

The clients purchased the property using an SPV, as the first of hopefully many projects. One is an experienced landlord, but the other was a first-timer.

The clients expect to sell the property after works are completed, and will use the profit to go towards the next project. We were delighted to help them on the way to purchasing their first investment property.