The Ask
Our broker introduced a married couple: company directors who owned a rural barn in Kent. Having successfully obtained planning permission to convert the barn into their main residence, they had already invested substantial personal funds into the project and were at the final stage of the project.
The contractors were already in place and the clients needed £80,000 to ensure they stayed onsite to bring the project to completion.
The Challenge
Several complexities required careful consideration. Firstly, there were questions around whether the project could be completed within budget. We originally offered a larger facility with the caveat interest would only be charged on what the clients drew down, but this was declined as they were positive that they could complete the project within the loan they originally requested.
The exit route also needed careful validation as the clients planned to repay via equity release, which meant confirming that a credible offer was in place.
The Fix
We structured a regulated development finance loan as a single drawdown of £80,000. Interest was rolled for the full 12-month term at 1.14% per month, meaning no monthly payment burden during the build.
With a day-one LTV of just 32% against a £300,000 current valuation against an £800,000 GDV, there was significant headroom to increase borrowing if costs ran over, alleviating the valuation concern.
The Benefit
The clients had peace of mind knowing that they could exhaust the funds they held whilst the application was being undertaken and when the final £80,000 was funded, they were able to complete the barn conversion and move into their new main residence on schedule.
An end LTV of just 12% against the £800,000 GDV meant the clients retained substantial equity in the property from day one, placing them in a strong position for the equity release exit.
Most importantly, the development finance enabled the couple to transform a disused rural barn into a bespoke primary residence, in an attractive location in the Kent countryside.
If your client needs a regulated development loan, get in touch with the Masthaven Finance team today – we’re ready when you are.
