Objective
Our broker’s client was looking to finance a large self-build project; they hoped to knock down their £1.5m residential property and rebuild from the ground up. The introducer asked us to look at options across several lending areas, including bridging finance.
Obstacle
The client had an outstanding balance of £900k on their mortgage which needed to be settled with the first stage draw down. They also needed to borrow £1.7m for the build costs. This project was unusual due to the amount of funding required; many self-build products have an upper lending limit of £2m due to the higher risk related to this type of finance, but we didn’t give up.
Outcome
The case has now completed and the self-build project is underway. The build is estimated to take around 12 months and the final value is likely to be around £3.5m.
The case was placed with a building society on a self-build product rather than a bridging facility; firstly, because this case would have been a regulated bridge with a maximum term of 12 months. As the estimated build time was also 12 months, this could have been risky if the build overran. Secondly, the rate and fees combined worked out to be more favourable overall for the client.
Stephanie in our specialist residential mortgage team worked closely with the building society to agree an exception whereby they went £600,000 over their maximum lending limit, and agreed a bespoke rate for the finance.
The product obtained was a 2-year term, interest only, discounted rate of 5.02% with no ERC’s. So once the build is finished and signed off, the clients are free to refinance onto a traditional mortgage.
The introducer was paid a five figure commission.
Subject to status. Product and criteria availability is subject to change or withdrawal at any time. For intermediaries only.
