£2.25m private bank remortgage to pay off a development loan

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THE SCENARIO

I was recently contacted by a property developer who owned a development site in Fulham with a total value of £4.25 million, plus two other businesses that were also based in the property sector. He had already built nine flats in total and managed to sell off five, however he was struggling to sell the remaining four. Because of this, he needed help arranging a remortgage to pay off a development loan (£2.35 million) he had originally taken out.

This quickly became problematic, however, as the majority of mainstream lenders had recently raised their rental calculations and would now require rental income to cover the mortgage by 145%, multiplied with a stressed interest rate of 5.5%. This made it pretty much impossible to source the right lending for my client on the high street.

Other lenders we approached were also wary due to the overall exposure that came with this case and were only happy to take the properties separately as a result, rather than all four. This is often the case when it comes to multi-story units or flats, as taking on all four would have been seen as too great a risk in the eyes of a lender, as they would have no idea what the return of sale would be at this point.

OUR SOLUTION

Luckily, however, I was able to source a private bank that was happy to lend to my client on a portfolio basis, using a company structure that would hold all four properties. This is often the case with private banks, as they are generally more happy to lend on a case-by-case basis and come up with a bespoke solution.

I managed to secure this within a 5-year term on a complete interest only basis at a rate of 2.75% plus the Bank of England base rate. This also came with no requirement for assets under management.

 

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