Funding the conversion of a house into two flats, N11

Client circumstances:

Our clients were siblings who had inherited a three-bedroom residential property 14 years ago. They have been renting it out as an entire home ever since but, in a bid to increase their rental income, they recently decided to convert it into two self-contained flats. Planning had been granted and works had already begun but the clients had run out of money and they urgently needed a cash injection to fund the extensive renovation. Eager to avoid further disruption, their broker got in touch.

MT Finance solution:

As our clients had no mortgage and the property was completely unencumbered, we were able to consider a relatively low loan-to-value which would still provide the siblings with the money they needed to finish the works. As well as converting the house into two flats, they were undergoing a ground floor extension and loft conversion, and also implementing sound proofing. Once we had received all necessary paperwork and legal documents, we issued a first charge bridging loan of £120,000 at 38% LTV of the property’s £315,000 open market value. The term was set at 12 months.

The benefits:

Thanks to our ability to move quickly, our clients were able to continue with the renovation without facing a substantial delay. They now have up to 12 months to complete the works and get the properties ready to rent out. They will then obtain a buy-to-let mortgage on each flat, allowing them to exit out of our bridging loan. If this happens before the end of their term then they won’t face any early repayment charges or exit fees. With the new mortgages in place they will be able to substantially increase their rental income.

Find out more:

If your client is considering renovating a property or changing its use, we can help. Lending decisions are usually made within hours of an enquiry and funds can often be released in a matter of days. Drop us a line to find out more.