Case studies

study 1

£366k bridging loan to acquire two refurbishment opportunities at auction

Borrower:

Property investor/developer through their Limited Company

Amount: £366k Loan type: Bridging Finance Term: 12 months Location: North West LTV: 59%

Project type:

Auction purchase of two houses to refurbish and sell

Special features:

» 100% funding of purchase costs and works » Properties in poor condition, with 1 unmortgageable

UTB’s bridging finance team was approached by an experienced property investor/developer seeking to buy two houses at auction. Both properties were in poor condition with one being unmortgageable. The borrower intended to buy both through their limited company, remodel, refurbish and then sell them on for a profit once improvement works were complete. No planning permissions were required, and the borrower had successfully completed similar projects. UTB was able to use the borrower’s unencumbered home together with the two purchased properties as security for the £366,000 loan which provided 100% of the purchase funds and works costs. The schedule of works and costs provided, together with the post-works value of the refurbished properties, was supported by UTB’s valuer. With the works estimated to take four months, the 12-month bridging loan term gave the borrower ample time to complete the projects and achieve the sales required to repay the loan and earn a tidy profit.

study 2

UTB steps in on £2.7m development when original lender refuses to extend repayment term

Borrower:

Developer

Amount: £1.8 million Loan type: Developer Exit/Sales Period Finance Term: 12 months Location: South East LTV: 65%

Project type:

Six high quality apartments

Special features:

» Refinance and time extension » New to Bank borrower » Swift turnaround despite COVID-19 restrictions

UTB’s team was approached to refinance a development loan when the borrower’s existing lender caused project delays and declined a request to extend the term of the original facility. The developer was building six high end apartments in a sought-after location south of London. Progress was slightly set back by delays in material and fittings deliveries and utility connections caused by the Covid-19 restrictions. However, the main obstacle was created by their lender suspending the release of funds during the first lockdown and demanding a revaluation of the project. Without funding, the borrower had no option but to temporarily suspend construction works until a revaluation could be arranged, which had a domino effect on the progression of the build once funding was eventually restored. With completion delayed and the sales period shortened, the borrower requested a facility extension to enable them to properly market the new homes and give them the best chance of achieving the projected sales values. The lender refused to extend the facility and the borrower faced punitive charges and interest beyond the original repayment date. Although the borrower was new to the Bank, they nonetheless demonstrated a strong background in construction and evidenced their ability to successfully deliver and sell high quality schemes. The loan was swiftly agreed and once the final building control inspection had taken place the original facility was settled. UTB’s £1.8m Sales Period Loan gives the customer up to a further 12 months to market the homes and achieve their maximum sales values.

study 3

UTB funds £6.7m north west development in JV with Housing Growth Partnership

Borrower:

Regional House Builder

Amount: £4.16 million Loan type: Development Finance Location: North West LTGVD: 62%

Project type:

Greenfield development of 25 family homes. A mix of 2-5 bedroom houses and bungalows

Special features:

» New to Bank customer » JV with Housing Growth Partnership » Original lender withdrew funding offer due to Covid-19 lockdown

UTB is funding a £6.7m development of 25 new family homes in a rural Cumbrian village. The scheme is being undertaken by experienced and successful regional housebuilder in a joint venture with the Housing Growth Partnership (HGP). UTB was approached by the borrowers after the original funders withdrew their offer following the onset of the first Covid-19 lockdown. The developers were within weeks of completing the purchase of the c3.2 acre site and the withdrawal of the funding only added to the housebuilder’s pandemic challenges. Both UTB and the housebuilders have an existing relationship with HGP and, despite the travel and operational difficulties presented by lockdown, all parties worked hard to get the project back on track. With the £4.16m UTB funding in place, the borrowers proceeded with the land purchase and groundworks have now commenced.

study 4

Bridging enables the swift purchase of an unmortgageable future home

Borrower: Home buyer

Amount: £1.2m Loan type: Bridging Finance Term: 12 Months Location: London LTGVD: 64%

Project type:

Purchase of unmortgageable property

Special features:

» Purchase via sub-sale required swiftly upon grant of probate » Property configured as three flats requiring conversion back to a single dwelling » Structural issues

UTB’s team was approached by a broker acting on behalf of a client who wished to purchase a large, detached house in London but with various challenges to overcome. The house was arranged as three flats with planning permission in place to return the house to a single dwelling. It was the borrower’s intention to complete the refurbishment and have the property as their main home. In its current configuration and condition the borrower could not obtain a conventional mortgage to complete the purchase. The property also showed signs of structural movement which required underpinning. A bridging loan would provide the borrower with the funds required to buy and renovate the property with the exit being a refinance to a residential mortgage once the transformation was complete. A further complication was that the house remained under probate and was being purchased as a sub-sale from someone who had bought the house at auction. Completion of the purchase was required within 10 days of probate being granted. The application was received by UTB on the 12th of April. Despite a full valuation, structural report and detailed schedule of works being required, the loan completed on the 29th April within 10 days of the grant of probate.