Molly Stott from Restore Finance was approached in January 2018 to discuss potentially refinancing a new client’s existing refurbishment loan on to an exit loan.
The client was already talking to another broker about refinancing on to a BTL mortgage.
Pete Stott of Restore Finance knew the existing lender and knew what it could charge if the client’s loan went into default.
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Being a 12-month loan, it was alleged that the lender could charge 21% on the first day of default, plus a further 3% for that month.
The client’s loan was £231,000, which equated to £55,000, which would take the debt to £286,000 immediately on day one of default.
With a valuation of £385,000, this would have taken the LTV to over 74% with a further 3% being added in each month of default.
The Restore Finance team explained this to the client so that they were fully aware of the default situation, but the client instead opted to go down the BTL route.
However, just before the Easter weekend, the client left a message with Restore Finance to say that the BTL would not complete in time and they had to complete on a refinance by 6th April to avoid extreme default penalties.
During the Easter bank holiday weekend, Restore Finance contacted Adam Turner at LSC Finance.
Restore Finance knew LSC Finance could deliver funding in tough circumstances and terms were agreed with the client and discussions were held with the lender’s solicitor and valuer.
Completion took place on Friday 6th April with the client securing the funds needed.
“This is an example of how important it is to ensure that your exit is in place well in advance of your loan term ending,” said Molly.
“Also, to see what the default terms are with the lender that you are about to enter into a financial agreement with,” Molly added.
Adam Turner and Shaun Morley from LSC Finance, added: “This demonstrates how LSC are prepared to work above and beyond to ensure that their brokers and their clients receive an exceptional service.”