Loan to Purchase Price – 96%
Loan to Value – 70%
Arrangement fee – 2%
Interest rate – 11.5% per annum
Exit fee – 1%
Term – 12 months
Our client is an experienced developer who had an option agreement to buy a house with a potential development plot in the garden for £890K.
During the period of the option agreement, the client managed to both obtain planning for a new build property in the garden, whilst also lining up the sale of that plot to a private buyer who wanted it to build their own house on. The private buyer purchased at £550K leaving £340K required towards the ‘overall’ purchase price.
The house was valued at £500K and our lender came in with a bespoke deal to provide a net facility of £325K (96% of the monies required to complete the purchase) with interest to be part serviced through the loan term to ensure the exposure did not exceed £350K (70% LTV). This allowed the client to retain a lot of their own funds for another project as opposed to tying them up in this scheme
The client had clearly manufactured a ‘good deal’ by lining contracts up to sell on the development plot to a ‘retail’ buyer at a full price on the day of completion – leaving them in an ‘undervalue’ position on the balance being paid across to the vendor for the existing house. Our lender recognised this and were delighted to provide the ‘96%’ facility.