10: A to Z of Raising Commercial Finance - H

Please note: with the market changing so quickly due to the current Covid-19 Pandemic, the content could be out of date at the time of listening. Email - [email protected]  Telephone - 07951 802602  https://www.facebook.com/thepropertyfinanceguy/ www.thepropertyfinanceguy.co.uk Please email me any questions, that you may have, and I will endeavour to answer them on the next podcast. Please also let me know if there is anyone that you would like me to interview, or if you would like to be interviewed yourself on the podcast.  These podcasts are not to be used in place of financial advice. You must take independent financial advice from a qualified independent financial advisor. These podcasts are for information purposes only Heavy refurbishment products are a subcategory of Development Finance and are suitable for developers who require finance to carry out property refurbishments incorporating some structural building work or to convert a property for residential use.  These facilities are not designed for Ground Up Developments but can normally cover everything up to this point.  They are also easier to obtain for the less experienced Developer.  These are the most common scenarios for Heavy Refurbishment:-  Single dwelling – used where the client sees the opportunity to add value by increasing the usable space in the property, perhaps with an extension or internal restructure  HMOs – either an existing HMO that requires structural changes to maximise the space available or conversions of single dwellings to HMOs  Multi-units – either complete refurbishment of multiple flats or where planning exists to convert a single dwelling into flats/ maisonettes to increase rental revenue and/ or value Semi Commercial – likely to be the conversion of the commercial element to residential or some heavier refurbishment to the existing residential element of the security  Commercial – likely to be either under permitted development rights OR where planning permission has already been granted to convert a commercial property to residential or mixed use (65% max). Normally, no demolition can take place whilst on the loan.  If the property does not require structural work and falls more into the ‘making good’ category, then this would more than likely be a Light Refurb.   Some common uses of the Light Refurb facility are as follows: -  Purchasing a property that requires thorough cleaning and redecoration before the property can be marketed for rental/ re-sale.  Completing a complete refurbishment (non-structural) on a property that has been previously let with the view to re-let or sell on once complete.  Improving market demand by updating facilities. (new kitchen, new bathroom etc.) Specialist property client buying a property with a known issue with the intention to remedy the issue and then rent/sell the property. (i.e. Knotweed) As long as the borrowing falls within 65% to 70% LTGDV, then the rule of thumb is that the Lender will normally do 70% Day 1 towards the purchase and then 100% of the Build Costs.  This sort of product attracts rates from 0.64% pcm depending on the LTGDV and LTV’s taken.