Development Finance for purchase and refurb
Lender enabled site to be acquired below market value while funding 86% of purchase price
Sector
Property Development
Location
North London
Purpose
Purchase and refurb
Scenario
Our client is an experienced property developer who actively seek properties that are being sold below market value. They sourced a site in North London where the prior sale had fallen through due to market volatility, leading to the vendor selling for a discount to our client.
Problem
Our client sought the maximum Day 1 loan possible to fund a purchase price of £750,000, being £175,000 below market value. With most lenders typically lending 70/75% against the lower of purchase price or market value, a higher market value is normally of no benefit for the finance transaction.
Solution
Our specialists were able to source a specialist development lender to fund 86% of the purchase price/75% of the market value, releasing the maximum Day 1 loan to the customer. The lender is also funding 100% of the construction costs. With this structure we were able to greatly improve our client’s working capital and stretch standard loan to value thresholds.