The Scenario
This client had never used bridging before and was introduced to us because the timescale didn’t allow him to organise a BTL mortgage in time to buy a BMV property. Our quick lending decisions and our bridging product appealed as the borrower didn’t need to put as much funds down day 1, 9% deposit instead of 25% for a BTL mortgage. The 3 bedroomed end of terraced property is local to the borrower, he lives a 15 minute drive from the security.
The client thought the property only needed a lick of paint which he could do himself with minimal cost. The main intention was to convert the property to a HMO, the borrower currently had 3 HMO’s and had a good understand of the requirements for the licence, he also has a relationship with the local council so he was confident that he would be able to get the security to a HMO standard easily, and apply for the licence with no issues. Once the property was converted into a HMO the borrower was predicting the rental income to be approx. £1,600-1,700 a month.
If the property wasn’t converted into a HMO the rental income will be approx. £1,100-1,200 a month.
Providing the Solution
The exceptional deal here was the small amount the borrower had to invest himself! The purchase price was below market value at £210,000 and our loan was £208,000 over 6 months, so he only needed a deposit of £20,000 to buy the property and as it only needed a light refurb and HMO conversion it only cost him another £2,000.
Before any work was carried out the property was valued at £260,000.
