Commercial refurbishment makes for a great investment

Situation

This particular client was looking to secure a relatively large bridging loan of £1,068,000 to fund the purchase of an unused three-story commercial property, which they were keen to invest in as a commercial refurbishment project.

Using a bridging loan for commercial investment purposes provides the ideal solution for those looking to make the most of this kind of opportunity. While a traditional mortgage can be used for this purpose, bridging finance not only enables the borrower to access funding a lot more quickly, but in most cases, the loan can be tailored to fit the client’s specific requirements.

In this case, the borrower’s plan was to obtain a bridging loan, so they could be in a position to purchase the premise and then use their own funds to complete light refurbishment works, transforming the building into a desirable space ready to rent out to multiple business tenants.

Solution

Typically, a bridging loan for commercial purposes is considered more of a high-risk deal for lenders, as there are fewer options to exit the loan in a relatively short timeframe.

As a result, it is often the case that the borrower will usually have to put up extra assets they own (e.g. other properties) as security before reaching an agreement with the lender.

In this scenario, it was agreed with the borrower that we would facilitate the funding needed at 60% LTV, for a loan term of 12 months and in addition, we would take a comfort security over a separate, unencumbered property.

Result

Once the loan had been issued, the client was successfully able to purchase the premises, complete the necessary light refurbishment works and then add the new office spaces to the market for various business owners to utilise.

Following successfully getting tenants in place, the client was then able to refinance onto a longer term buy-to-let mortgage.

While some lenders would be uncomfortable in making this type of loan, this was no problem for Hope Capital. We have over 10 years’ experience working with brokers and their clients in helping them achieve their commercial investment goals. The knowledge and experience of our team ensures we can deliver this type of solution and we were delighted to be able to help this client navigate their way through the loan process.