Shawbrook provides heavy refurb bridging loan to convert run-down house into HMO

Shawbrook Bank has completed a £261,000 interest-only heavy refurb bridging loan for the conversion of a single-family house into a six-bed HMO.

The property was built in 1910 and was noted as “significantly dated throughout”.

Repairs and general maintenance had been neglected for several years and a substantial amount of work was required to modernise the property — which included damp, external joinery repairs, potential ceiling asbestos, leak damage and an old boiler. 

Upgrades were also required to address a poor EPC rating. 

Based on the potential of the property once converted into a high-yielding HMO and the customer’s previous experience on similar projects, the loan was agreed on a nine-month term at 75% LTV.

Shawbrook was able to add the arrangement fee on top of the max LTV, rather than deduct from the gross loan, resulting in a higher net loan amount for the client.

The client secured the funds required to complete the purchase quickly and undertake the heavy refurbishment needed to transform the property. 

The borrower has also obtained  the exit route — a term mortgage — enabling him to recover his deposit and the refurbishment funds spent, with the value increasing by almost 40% from the purchase price.

The case was introduced to Shawbrook by brokerage Go Finance.

Gavin Seaholme, head of sales property at Shawbrook, said: “Working with expert broker partners and delivering a good customer journey and outcome are key to providing bridging solutions. 

“At Shawbrook, we have an award-winning product offering with products that are aligned to our customers’ needs.”

Neil Moorhouse, managing director at Go Finance, commented: “The process with Shawbrook from quotation to completion is extremely straightforward with market leading pricing, which enables Go Finance to offer best-in-market products. 

“Shawbrook are an extremely helpful bank on all levels and offer great support to the intermediary marketplace."

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