To ensure opportunities are not missed, developers require lending decisions to be made quickly, so they can purchase properties and proceed with the necessary refurbishments.
To achieve this, experienced property developers seek out short-term property finance providers with direct personal knowledge of the challenges faced by developers, so they can move forward without delay.
One developer from the West Midlands recently experienced this first-hand, as they required a bridging loan of £106,500 to purchase a two-storey end terrace house, with a view to renovate before refinancing onto a buy-to-let mortgage.
Having previously delivered similar projects, known as ‘tart and turn transactions’, the client was well-equipped to purchase the freehold property, with plans to carry out the renovations using their own resources.
Once the background checks had been completed, and the financial security of the client was confirmed, Signature Property Finance agreed to provide a competitive loan, allowing the project to proceed to drawdown on the same terms as agreed at the start.
Delivering much-needed housing
Located in a residential area, two miles southeast of Coventry’s city centre, the property’s redevelopment would offer much-needed affordable housing to local residents, so it was important that a lending decision could be secured promptly.
The two-storey house along with its single storey flat roof extension was currently vacant and in need of modernisation. Prior to its acquisition, the house had no central heating system in place, so the developer planned to implement one as part of the renovations.
Other than some minor damp repairs, there were no material defects, so the refurbishments would involve straightforward redecorating, as well as a new kitchen and bathroom – work that was only expected to take three months to complete.
The current state of the property combined with examples of other comparable sales, led to a current market value of £142,000. Once the house had been renovated, it would then be refinanced onto a buy-to-let mortgage based upon a £160,000 valuation.
To ensure the best possible deal was secured for the client, Signature Property Finance agreed a competitive package for this simple project to help build a strong relationship that would ensure Signature was the first call for the developer’s future finance needs.
Signature Property Finance Relationship Manager, Bob Stones, commented: “As an experienced short-term property finance provider, we understand how important it is for developers to receive quick lending decisions, as unnecessary delays could cause the opportunity to be missed.
“No matter how big or small a project may be, we strive to support all of our clients, helping to address the UK’s housing crisis one development at a time.
“Our in-house team has extensive personal experience, which makes it easier for parties to agree suitable terms and secure the necessary funding. We always deliver on our promises and do what we say we will do, giving developers the security of funding they need to make informed decisions.
“Given that this specific client has plenty of experience delivering similar projects, we are confident in their ability to oversee this kind of development, as well as the strategy for funding it.”