Mortgages for Business raises £600k to build luxury house in Kent

Mortgages for Business raises £600k to build luxury house in Kent



How Mortgages for Business raised finance for high-net-Worth couple with absolutely no development experience .

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How Mortgages for Business raised finance for high-net-worth couple with absolutely no development experience.

The clients: A married couple. High Net Worth individuals. The husband is a doctor.
Property development experience: None.
The project: Luxury new-build house in prime Kent commuter town
Purchase price: £700,000
Build costs: £600,000
GDV: £1.6 million
Loan amount: £600,000
LTV: 43 per cent of GDV
Lender: Barclays

When a property opposite a couples £3.6 million home in Kent came up for sale in 2011, Mortgages for Business stepped in to help fund the building of a new luxury house.

The building was in poor condition but held a restrictive covenant preventing the couple from building a new garage on their existing property.

The couple bought the property for £700,000 with a view to demolish it and build a new luxury house further away from the boundary and therefore removing the covenant.

The valuation for the new house was £1.6 million, combined with the removal of the covenant which would allow the couple to build a garage, a profit was going to be made from the deal.

It took the couple around 18 months and £30,000 to obtain planning permission, remove the covenant and move the boundary.

When this was done they approached a broker for help in sourcing finance to fund demolition and build.

As the broker didn’t have any experience sourcing and negotiating development finance, he asked Mortgages for Business.

Managing Director of Mortgages for Business, David Whittaker, commenting on the deal said:  “The challenge for us was to find a lender willing to take the couple who had no previous experience.

“We approached high street lender Barclays, which was happy to consider the case because the couple were willing to hire professional contractors to run the project for them. We negotiated a loan of 43 per cent of the gross development value, with stage payments staggered over the build.”

Construction on the property commenced last summer and the new house is currently in the process of being sold.

The originating broker dealt directly with the clients throughout the project and Mortgages for Business worked with the broker, the lender and all other parties to get the deal through.

 



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