Mortgages for Business recently faced the challenge of raising finance for a borrower with no personal development experience.
The development was a parcel of land in a pretty Kent village which had been purchased for £625,000 by the client with his own funds, including a substantial contribution from his father.
The client had successfully gained planning permission for three five-bed executive homes, but needed £1 million to build them. The anticipated Gross Development Value was estimated at £2.4 million (£285 psf).
The client was the director of a newly created SPV limited company, set up specifically for property development projects. M4B stated that the director is a full-time project manager employed within the construction industry.
Aldermore Bank agreed a facility of up to £1.175 million (49 per cent of GDV), to be drawn down in stages subject to architect's/quantity surveyor's sign-off. To support the facility, the bank insisted on a limited (unsupported) Personal Guaranteed from the borrower's father. Aldermore determined that the PG and the client's work experience made the scenario a suitable risk, particularly as the client had chosen excellent contractors to carry out the build.
Commenting on the deal, David Whittaker, Managing Director of Mortgages for Business said: “Construction commenced in the summer of 2013 and the first house was completed and sold by February 2014. The sale paid off the amount drawn down (not the entire facility). Then the client attained a residential mortgage in order to move into the second house. Pending the sale of house number three, which is now finished, the client is looking for his next project.”