Hope Capital Property Finance has provided acquisition and refurbishment funding for the conversion of a three-bedroom Welsh property into a four-bedroom HMO.
The case was introduced by Lyndsay Kent of TBK Mortgage Studio for a developer buying a mid-terraced residential property for £85,000.
As HMO conversions in Wales fall outside permitted development rights, the borrower needed to secure the property before planning was in place while retaining a route to refurbishment finance once approval had been obtained.
Hope Capital Property Finance initially provides a purchase-only bridging facility through its Flip+ proposition, allowing the developer to complete the acquisition ahead of the proposed conversion.
Three months later, after planning was secured, the borrower refinances onto a 75% LTV refurbishment facility at a rate of 0.89% without having to move to another lender.
A further £52,000 is provided to fund the refurbishment works. Tranches are released on the same day that Hope Capital Property Finance’s loan support specialist, Sophie O’Neill, receives the monitoring agent’s report.
An 18-month term is available under the facility, although the borrower requires 12 months to complete the project.
VALUATION AND LEGAL PROCESS
A desktop valuation is used for the initial purchase facility, followed by a full valuation once planning is in place and the refurbishment work can begin.
Dual legal representation is used for both the purchase and refurbishment facilities, alongside full title insurance. Instead of paying a new facility fee in full, the borrower pays an uplift fee on the additional refurbishment funding required, together with a single administration fee covering legals.
Underwriter Stacey Bradwell handles both the acquisition and refurbishment facilities, while national account manager Sam Lea and relationship manager Chris Grierson work with Kent to structure the funding around the property’s valuation.
Kent says: “From the outset, I wanted to be sure I could make this deal work for my borrower, which meant sourcing a lender that could keep costs down throughout.
“Despite the complexity, Hope Capital Property Finance stayed relentless in finding a solution throughout and made what could have been a very difficult case easy for my borrower.”
Lea says: “This was a great example of a case where the funding needed to work around the different stages of the borrower’s project.
“They needed to secure the property first, while also having a clear route into refurbishment funding when they were ready to progress.
“Flip+ gave us the flexibility to support both stages, while keeping the borrower with Hope Capital Property Finance throughout.
“By working closely with Lyndsay and our underwriting team, we were able to structure a solution that reduced the cost and complexity of moving from the initial purchase bridge onto the refurbishment facility.”
Bradwell adds: “Having underwritten the initial purchase facility, I already had a clear understanding of the case when the borrower was ready to refinance onto the refurbishment facility.
“That continuity helped make the transition between the two facilities more efficient and is a great example of how closely our sales and underwriting teams work together.”
