01 November 2018
This £75,000, 3 bedroom property in Newcastle required complete refurbishment, including a new kitchen, bathroom, extensive electrical works and new flooring. The associated costs were estimated by a surveyor to be in excess of £12,000, but this experienced investor carried out the refurbishment himself in order to keep costs down and maximise profit.
A loan of £63,750 was secured at 86.7% LTV (including fees) to cover the £7,500 cost of works, with all funds being released on Day 1. The rental following completion of the works was £595pcm with a GDV of £110,000, and the investor moved to a term loan with Shawbrook for no fee, a smooth exit facilitated by Crystal Finance on behalf of the client. The valuation report included commentary on the properties initial value, the refurbishment works carried out, and the GDV and final rental yield. The same surveyor carried out the inspection for the term loan to ensure the necessary works were complete and ensure a consistent approach to valuing the property.
Commenting on this innovative product, Gavin Seaholme, Head of Sales, Shawbrook Commercial Mortgages;
“It’s hugely gratifying to see our brokers take to this innovative addition to our Short Term lending range, and it’s testament to the knowledge and expertise of our panel that they have communicated this to their clients so quickly. When it comes to the Short Term market it is crucial to be able to act quickly and take advantage of new opportunities, and accessing 100% of the refurbishment costs opens up new doors for investors as they seek to build value and grow their portfolios”.
Managing Director, Jo Breeden from Crystal Finance added;
“The key to this transaction was cashflow management. This product from Shawbrook allows the client to get the maximum leverage for his deposit, and allowing a loan at technically 86.7% LTV all-in is market leading in every sense. This means the client can complete the refurb in as short a time as possible as funds are already there, and more importantly exit onto a preapproved term loan with no additional product fee.”
The “Lending for Costs” product addition complements the lenders award-winning Short Term offering which retains the same key benefits such as a 0.25% existing customer discount, the ability to switch to a Shawbrook term product with £0 arrangement fee, and no minimum interest periods or Early Repayment Charges (ERCs).