Happy Friday everyone – by the time you get this I will be on my way to Pontechianale for a well earned break…

This week is a case study on the importance of the ‘route of least resistance’

The case involved a commercial property in London, with planning to change to 3 flats and keep the commercial on the ground floor.  The client is an experienced investor with a mixed portfolio as well as having carried out many refurbishments.  They wanted to borrow 70% LTV for the purchase.  The valuation was ordered within a few days… we had a 5 week completion time and it all seemed on track and straightforward.

We complete on plenty of refurbishment loans, and clients often are looking at the lowest cost option, forgetting that actually what they want is a quick, pain free completion and that they are confident will complete on time. The lender we chose are not expensive by any means and they have very reasonable legal and valuation costs, but they may not be the cheapest headline rate.

It was also important that we had a clear exit in place as lending against commercial at the moment can be tricky.

Everything started out very positive and felt like it would be a fairly painless completion.  Then the first curve ball flew in… there was a £200k down value, albeit the GDV was bang on. The vendor wouldn’t budge on the price and so discussion time was required to decide what to do.  The clock is still ticking. As the GDV came in as initially expected, they decide to proceed.

While this was going on, as happens on cases with a short completion date, we were getting all the due diligence and documents signed off by the lender.

Then we received a call from the client to say that the family has now got involved and offered money so the funding is not required at all.  We hadn’t asked for an up front fee, so you win some and lose some. He’s a good client of ours, so we know he is happy with our service and we moved on to other cases.

I then got a call a week later to say there was some confusion on the family help and £200k net is still required for completion in 2 weeks.

This is when clear communication was required. Due to family funding, the shareholders increased from 2 to 7, which included funds from 6 different accounts, including 3 offshore companies, which increases the due diligence. You think COVID is a moving glacier, cases can be a bit like that too!

The important thing to work towards is The Route of Least Resistance… always focus on the prize. This is particularly important on a case that has exchanged and requires a speedy completion and includes many stakeholders.

The Directors were a dream to work with, but the client’s solicitor gave us many challenges.  I have learned over the years that the name and prestige of a law firm does not necessarily give you the right solicitor.  It is always about the person actually handing the case that matters.

The lender, Lendwell, were amazing, as always.  They are sensible and don’t invite dramas of any sort. Full communication with their lawyer, Melissa at Lightfoots, also made a huge difference.

Completion was 10th August, all on time.  The client can now get on with the refurbishment and we will be ready to look at the refinance for them once it’s completed.

Baya offers the steady hand on the rudder at all times.  However tricky something may seem, keeping your eye on the prize is what gets it over the line.  Thanks everyone involved.


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