What you need to know about semi-commercial mortgages – and valuations!

We’re back! After a few weeks of dealing with the crazy amount of completions we seem to have had, and a week of an un summer holiday in Devon it’s back to blogging!

This week we are talking about semi-commercial mortgages. Specifically the valuations for these mortgages as they are so important.

When someone calls me up to ask about semi-commercial mortgage quotes and costs, the assumption from them would be that we are looking for the ‘lowest cost’ option and that’s not what I am thinking! There are a number of semi commercial lenders back in the market now, most at 75% LTV and some at 70% and their rates are similar. There are pros and cons of them all and we will discuss that. The most important part of that comparison is not necessarily rate though, the valuation methodology is often overlooked and that’s something I will always want to cover at the beginning.

How do you value a semi – commercial building? 

The commercial element can be valued as a vacant building, or with the benefit of a tenant in the property. The difference is usually about 10-15-% depending on the location, tenant and lease length. Some lenders will use the vacant value and some use the market value and that can make a big difference to the amount you are able to pull out of the property.

What about the residential element? 

It’s more common now to see HMOs above a commercial unit. It’s an easy way to up your rent, and given the location (usually above a parade of shops) there is less issue with demand when letting to students or professionals than to a family.  Again the value of an HMO can depend on if you’re using the vacant or bricks and mortar value, or the market value. There is an assumption that as you are paying for a commercial valuation that you will get a commercial figure but this isn’t necessarily the case!

Some lenders will use the market value, which is fantastic for pulling as much money out as you can, and some will (as with the commercial element) use the bricks and mortar, or vacant value. 

As an example, we have recently refinanced a semi commercial property for a client. It is a shop with a 4 bedroom HMO above. The vacant value is £285,000 and the market value is £310,000. This means that the client has been able to pull out an extra £18,750 by using the market value of the building. This can be far more important than a small difference in interest rate. This client has used those funds as a deposit for another BTL property, so the onward return is increased even further.

So how do you know what to do and who to use? 

This is where you need a good specialist broker! We have great relationships with our lenders, we only use lenders that we know and trust and this means we know their criteria and appetite inside out so we know what to expect! With rules changing so often at the moment,  it’s important that your broker specialises in these types of cases and understands valuation methodology.

As always give us a call if you have any questions.

 

Funding your projects when your usual lenders can’t help

I think we’ve all now recovered from the excitement of the Euros and now summer has arrived!  I hope you’ve all had a good week.  This week I am talking about funding that’s a bit more outside the box.  As you know, we can look at all sorts of scenarios, and one of our lender’s has really upped their game recently so I wanted to run through what they can help with.

Buy to lets when you don’t have enough experience for standard lenders

We often see clients come to us with a great project, and external experiences which means we are confident it will work – this is usually where they have carried out works in their day job, so not for themselves.  This doesn’t count as experience for most lenders though.  This can cover HMOs (of any size), multi-unit blocks of flats or semi commercial buildings as well as single lets.

We can now help with mortgages up to 75% LTV for these scenarios, at a really reasonable interest rate.  The products are fixed for 2, 3 or 5 years, allowing you to gain the experience you need to move on to a lower interest rate and longer term product.  Its important to balance the lender’s risk and your experience with the rate – and also remember that you aren’t spending time or capital on projects you don’t really want to do before jumping into bigger ones!

Foreign Nationals and Ex-Pats

This is another area which is tricky to fund at the moment, so this lender allows you an easy way in to the UK market.  We can raise up to 65% LTV and the minimum loan size is £50,000 so it is available for smaller properties.  Again, the loans are for 2, 3 or 5 years and the rates are reasonable so with a good yield it is an accessible way in.  you don’t need any experience, or property in the UK at all, which is often a sticking point.  Most counties are covered under this product, and it can be in a personal name as well as limited company.

Slight credit issues

This is another potential barrier to lending at the moment.  Many lenders have become more stringent with their credit rules, meaning that even a slight blip can prevent loan approval.  Having a short term solution for first time buyers and investors is lacking in the market

This lender will allow a small amount of adverse credit, which means that a past issue which has now been resolved will be disregarded.  Some examples could be a satisfied CCJ under £5000 in the last 2 years, or one missed mortgage payment in the last 3 years.

This would cover all scenarios, so buy to lets, HMOs, multi-unit blocks and semi commercial up to 75% loan to value at the same 2, 3 or 5 year terms.  This allows you to build your experience while time is passing on your credit file to allow you to move to a more mainstream lender afterwards for a slightly lower rate and longer term.

As always, give us a call if you want to run through a particular scenario then give us a call.

Adding value to your property: How can a bridge to term product help you? 

What an amazing week we’ve had – we are still flying high from Wednesday night!! Roll on Sunday now…

This week I want to talk about bridge to term products specifically. Last week we covered bridging and why it is so important to add value to your property, but there is more to it – and there are ways to reduce your overall cost and this is a big one!

What is bridge to term? 

It is a product which allows you to use the same lender for the bridge to purchase the property and then use it as an exit onto a term mortgage as well.

How does it work? 

There are two types:

  • You can have it as ONE product, which means that you have two offers at the beginning (one for the bridge and one for the term) and the valuation with cover both products too, so you have certainly over the end value and what you can work towards.
  • You can have it as 2 products, so you apply for them separately and have two valuations and offers (the term gets started once works have been finished). This allows a valuation to take place once works are completed so you often get a more favourable figure, it can also take into consideration the finished property, which really can help. As with the same lender it has the advantage of lower arrangement and legal fees.

What are differences between this and a standard bridge?

From a cost point of view, you can save on valuation costs (in some instances), legal fees and arrangement fees. This will help to reduce your finance costs and increase your ROI. As bridging can be very expensive, this is a good way to bring it down.

It also offers you some certainty around the exit for your bridge. The lender will underwrite the case for the exit as well as your initial loan, so any issues with the property should be picked up on before you buy the property. There’s never a guarantee with these things, but it does mitigate some of the risk.

How much can I borrow and what works can be carried out? 

This depends on the type of product.

We have a lender who will look at both parts as one product, as mentioned earlier. This is ideal for light refurbishments before letting out as a single let. For example where the EPC isn’t good enough, or it needs a new kitchen or bathroom. We will know the end value from the schedule of works and the valuer will confirm this. You can borrow up to 65% for the purchase, and then 75% for the refinance. This is a low cost option and offers some security but does mean you are putting more in up front.  The 2nd valuation is only a revisit, to confirm the works have finished – it cannot change the GDV. You have to complete and refinance by 6 months maximum.

For more complex refurbishments, ie conversions from commercial to residential or to HMOs we have another product. This is set up as two products, a bridge to start and moving to a term facility when it’s finished.  The initial valuation will include GDV expectations from the valuer. For light refurbishment projects we can lend up to 85% of the purchase price (subject to some restrictions) and for heavy refurbishments we can go up to 75%. Heavy refurbishment would also include anything requiring planning or building regulations. You also have up to 18 months to do the works.

For the term exit we can generally lend up to 75% of the new value.

For both options we do not need to wait 6 months from the purchase.

As always, give me a call to discuss individual cases and how we can make it work. Have a fantastic weekend and come on England!

Adding value to your property: Planning

This week we’re exploring some more ideas on how to add value to your property. I’ve chosen to talk about planning as it is something that can be used in many different ways.

Planning gain

This is one way which I think is under used, and can be such a great way to add value quickly. Especially in the current market when investors are looking for opportunities and build costs are so high it can be a great alternative to completing the works yourself – it may be just as profitable. It allows you to sell on the asset quicker than if you were completing the works too, meaning that you can move on to your next project.

Finance has to be thought about carefully in this instance, as there always needs to be a back up option which the lender will base their decision on, but as you aren’t completing the works you don’t need to worry about the refurbishment costs. This means you are borrowing less, and the GDV on various options are less important at this stage. When you are completing the works and borrowing the refurbishment costs the lender will always work back from the GDV, and if the option is funding without planning,  there may not be enough profit in the deal to make it work.

This works well for extensions, change of use, commercial to residential (where it falls outside of PD) and conversions to houses and flats.

The added advantage is that you don’t need so much experience as you are not carrying out the works yourself.

Planning to carry out the works yourself…

There always is the opportunity to carry out the works yourself of course.

With a shortage of homes, a relaxation in permitted development rights and a booming housing market, there are always opportunities in this area of the market!

What to watch out for?

  • Land with property to give you options with additional houses or extensions
  • Blocks of flats – looking for options to add units or extend
  • Development of existing dwellings – this could be to knock it down to make better use of the space, extending or splitting into multiple dwellings
  • Floor plans are key to looking at your opportunities!

What experience do you need?

Lenders are becoming more flexible with what they need, and even with ground up sites we have options if you haven’t done one before. You do need some experience with a project that requires planning but it probably isn’t as much as you think, and you can use your residential properties as experience too.

we have had some examples recently of lenders who are happy with quite a jump up from a small renovation to something much bigger.  It does mean that more due diligence will be carried out on the contractor, and a JCT contract will need to be in place but this does open up potential opportunities.

JV or teaming up with other investors to increase the overall experience of the team is a very good idea too. It shares the risk and the rewards

It’s always worth a conversion to see what’s needed and how it could work.

Who’s afraid of a vacant commercial property…?

Hi everyone. And it’s Friday again and so close to lock down ending (fingers crossed).

If you’ve been reading our blogs over the past few months, you will know that I have got involved in a couple of properties for development.  I’d like to talk about the commercial one for this blog.

I’d known about this property for a while, as the buyers are clients of mine.  The property is a D2 usage large building in Salford.  D2 is leisure, as it was a crown bowling social club.  It was also run down and vacant.  As you can imagine this can cause challenges in getting funding.

The property had a 15 month option from February 2020 in order to get planning for residential.  You’d think that 15 months is enough time to get things sorted, which in normal times it would be.  The property stands on an acre of land, the building itself has a footprint of around 320 sq/m – so there are many options for an exit, it was the purchase that was proving challenging!

I got involved end of last year, just to find funding.  This proved rather difficult.  The commercial market has really taken a hit with lenders during COVID.  For a while it simply wasn’t available, then when it did return it was specific to certain professions and whether they had been trading during lockdown.  This fell into neither camp.

The week before exchange I put my hat in the ring to be a part of this.  Thankfully the investors were happy to do that; it spread their cashflow, which is important at the moment.  If you know and trust the investors you get in bed with, then it’s better to share a number of projects than be responsible for it all.

When a property has a lot of options, although it should be a positive it can prove a negative with lenders as it causes uncertainty.  We could go full on development of 36 or so apartments; a mixture of houses and apartments; renovate the house and split off the land; keep the property commercial and split off the land… and the list goes on.

We now had a deadline to exchange by May 10th, but due to planning having been changed (a housing association wanted to buy it with planning) so we still have no planning.  As most of you will have experienced, COVID has caused such bottle necks in so many areas and this is clearly one of those areas! The application went in for an AIP on 7th May and I looked at it as an auction buy.

I approached Shawbrook to see if they would consider it – at the time we wanted to convert the house into 7 flats under permitted development, but could not get it on PD due to D2 usage not allowing it.  We could also not apply to change the commercial usage as planning was already in.  It was all really frustrating.  We decided just to buy as is and landbank it until planning was through.  I can’t praise Shawbrook, particularly Mark Whitburn and Kieran Route enough, for really getting on with this knowing the completion date of 18th June.  They have agreed 60% ltv on Vacant Market Value, which was the purchase price (£500,000) – very reasonable indeed.

The property is a good buy. There is no way that a piece of land of this size in Salford can lose you money, but having to react quickly at the moment can be a challenge.  Sometimes you really need to go with your gut, as properties are in low supply and you can lose out.  Of course there are risks here, but aren’t there in all walks of life? You could argue that doing nothing is the biggest risk of all.

All is set for completion on 18th.  I know I bleat on about the power team – IT IS THE MOST IMPORTANT THING – we couldn’t achieve this without our amazing solicitor (Phillip Adam) and the safe hands of Shawbrook and Laura Nicholl at Pure Law.  They are worth their weight in gold for the stress they alleviate.  Particularly when the completions side of things is really boiling over at the moment.

What have I learnt from this? 

The educational part of this is the change in lender appetite towards properties like this as we have progressed with it.  There has been a realisation from lenders that there are some properties that are worth funding; there is a still a massive shortage of residential properties and the Government is pushing for smaller builders to step up.  I would ask you to consider these when you are looking at your next investment.  If you don’t have enough experience, then bolt onto someone who does; spreading the risk/cash and progressing up the development ladder as well.

As always, we are happy to run through the figures and see what options are available to you.

What can you do if you don’t have planning?

I hope you’ve all had a lovely week enjoying our new freedoms, I know I have! It is tiring though!

This week I want to talk about what to do when a property doesn’t have the right planning for your plans. This covers a number of areas, and some are easier to overcome than others. There are a few solutions though.

Create a back up option 

This is probably the easiest solution to the issue. It works particularly well with conversions to large HMOs (when you’re not in an Article 4 area).  Large is classed as everything 7 bedrooms or more and requires a separate planning class.  Also semi commercial property that you want to convert to residential and can’t under permitted development. What it means is that you have an ideal scenario (if planning is approved), but also an alternative that could work without any change of planning class.

With the example of an HMO it could work as either a large HMO but also as a 6 bedroom. You will need to asses the refurbishment costs and the rental for both options and ensure that it works either way.  Some clients will do the works assuming they will get planning, and then use the extra space for a study or additional communal space if they don’t. Others convert it to a 6 bedroom and then wait for planning to be approved to do an additional extension or garage conversion for example. What you do will very much depend on the layout of the property and the timescales needed for either option.

With commercial property, this can mean keeping the existing commercial if you don’t get planning to convert it to residential. The rental again would need to work either way and you need to be comfortable with either option. Vacant commercial buildings can be difficult, so there needs to be a good demand for the commercial unit for the bridging to work, and then let out before we move it to a term mortgage.  We have had other examples of when this scenario works; converting semi detached properties back to a single dwelling, houses to flats and licensed HMOs in Article 4 areas looking to extend to larger properties.

A favourable pre-planning application 

There are instances where a back up option just doesn’t work. This could be where the costs or rental potential just don’t work financially for the back up option, or when there isn’t a back up option! This is usually for vacant commercial buildings but there are some other examples too.

In this instance, buying yourself some time to get planning is the ideal solution. This can be done through a conditional exchange or an agreement with the vendor. Where this isn’t possible, achieving a favourable pre application can really help. It really does depend on the overall case and it’s not necessarily a guarantee but it can be enough to complete on your bridging loan. Where a precedent has been set, or there’s been a previous application that has expired then it really does help.

Take advantage of  permitted development rights

There are plenty of areas where permitted development rights exist, and the rules have relaxed considerably recently.  Knowing what you can and can’t do is so important and can give you an edge over other investors.  We can complete without the full approval, as long as we know that is falls under PD rights.

Use alternative funds

The final option is to avoid mortgage finance entirely. This is not something that will work for everyone, but when you have the cash to purchase the property and are willing to take the risk, then this can help. Once planning is granted then we can look at refurbishment finance and can take advantage of the uplift in value that planning has created. There are clearly risks involved with this, so ensure that you have carried out your due diligence, and we are happy to talk about the potential exit routes before you purchase the property.

It’s really important not to get emotionally involved… you are in for a return in investment, keeping your eye on the prize can mean saying No!!

As always, we are happy to chat through any specific deals that you have and talk about your options.

BTL first or straight in to HMOs?

This week we are looking at the pros and cons of both strategies; single let’s first or HMOs? It’s a question that comes up lots so here’s what I think!

 

Single let’s first 

 

The big advantage of this method is experience. Most lenders require you to have some rental experience before you go into HMOs or other more complicated properties such as commercial and blocks of flats. It also allows you to gain some rental experience and possibly some refurbishment experience too. You may want to do this first to feel more comfortable moving to bigger projects; to test the water and see if it’s something you enjoy doing. 

 

The main disadvantage is the money that you will end up leaving in the project in order to gain the experience. I have completed projects with clients that have enabled them to pull all their money out, but this is usually where they’ve added bedrooms within the existing floor plan or clever extensions. Usually you will end up leaving some money in, and that can then restrict how quickly you can move on to your next project. The other issue can be that you end up with a property that isn’t yielding as much as you would like and you didn’t really want a single let anyway! 

 

What about going straight to HMOs? 

 

The big pull towards HMOs are the rental yields. Of course this can apply to blocks of flats or serviced accommodation as well. This dilemma will apply to all of these properties to an extent as you need some experience for all of them.

 

What you need to decide is whether you want to pay an increase in the interest rate, to compensate for your lack of experience versus putting cash and cost into an asset which isn’t part of your long term plan.

 

In terms of interest rate for for HMOs, up to 5 bedrooms will be a slightly lesser rate than over 5 bedrooms. Both options will be higher than if you have some experience. In both instances the valuation will be a bricks and mortar figure and you will need to own your residential property. We can look at 2 year products to allow you to refinance to a more competitive product and hybrid valuation if that’s something that can be achieved. 

 

You will need to be looking for a property which doesn’t need extensive works (planning or building regulations) unless you have done something similar previously. You will require a management agent in place to look after the tenants. When you’re looking at refurbishment experience, you need to have done something similar previously, but this can include projects on your own home. 

What if you don’t have a residential mortgage? 

 

This is more tricky at the moment but there are still options. Single let’s are easier to place but there are more restrictions on affordability. For HMOs we need to think outside the box to find a solution, but it can be done! Some  clients choose to buy something cash and then refinance after they have owned it for a period of time and others use bridging to get around the experience. Looking at occupied properties can be an option too. 

 

When you don’t have the experience required, we need to balance this with something and this is usually a higher cost – whether that is using bridging or an increased interest rate on your mortgage.  This is a short term issue though, and once you have one property under your belt you have far more options.

 

We can usually find a solution somewhere though, so call with your enquiries and we can chat through the options.

 

Focus on HMOs: Do you need a hybrid valuation and why you want a specialist lender

So here we are at Friday again – for many of us the Friday we have been waiting for! We’ve also had a solid budget this week, with an extension to the stamp duty relief which is great news.  With all this, as well as a clear roadmap out of lockdown, it does seem like there is some vibrancy to the market this week.

I’d like to talk about HMOs this week.  It’s a hot topic at the moment and we have had many enquiries asking about how to value properties and what rates we can do.  These conversations don’t always go the way clients expect though, so I thought I’d explain it in a bit more detail.  As you know we are big believers in looking at the bigger picture and not chasing low rates so this should help explain why.

Do you need a Hybrid valuation or will a bricks and mortar work?

Before we go on to hybrid and bricks and mortar methods, I just want to mention commercial valuations.  The words ‘commercial valuation’ are used a lot in the property world, and not always correctly.  The lender decides on the type of valuation we use, so we can’t request what to have; and no, it doesn’t always mean a yield based valuation!  We would only be able to use a commercial valuation for HMOs where it is 7 bedrooms or more.  There will always be a ceiling price for a property in an area based on the location, size, condition and demand and that needs to be taken into account when looking at the yield calculation.  It’s really important that as investors you do the same to be as accurate as you can.

Hybrid valuations are also something which I don’t believe are explained very well a lot of the time!  It is something that some lenders allow, but it is up to the valuer to decide what that means and what the figure would be.  I have written a blog on it here, but what I wanted to talk about today is whether it is important to you and your property.

I am a big advocate of using a hybrid valuation, but there are only a few lenders who truly use it, and it is more expensive.  So do you need it? 

If you have spent a significant amount on your refurbishment, and the total cost (refurbishment and purchase price) is significantly higher than the bricks and mortar comparables then it is worth exploring, but if not then it may not be.  I have had examples recently in Suffolk and Kent where the bricks and mortar value is significantly higher than the hybrid calculation, but areas in and around Manchester, for example, have lent themselves to a hybrid model.  It allows you to pull out what you have spent on the property when that figure is more than the bricks an mortar.  We do sometimes see the elusive ‘no money left’ situation sometimes, but that is rare, especially at the moment.  When we have seen it is where the client has done really well negotiating on the purchase price and they have made the extra money before they have even started works – you can only get this back out on a refinance through.

So why would you want to use a specialist lender?

There are so many benefits to using a true specialist lender.  Their rates will be higher than the ‘specialist side of vanilla’ lenders, but as you know we are big believers of looking at the bigger picture:

  • They work with property investors regularly, so they understand that your income may be low due to carrying forward losses.  There is generally no minimum income requirements as long as the situation makes sense
  • The required documents that you need to provide are simple and straightforward.  There is no new list once the initial requirements have been satisfied!
  • We are able to speak to the underwriter directly, so if there are any issues then they are usually quickly resolved with a phone call.  We have a good relationship with our lenders so are able to pre-empt any potential issues a lot of the time and have a good idea of what will work and what won’t.
  • They are far more open to investor funds, which is a big deal at the moment.  I have mentioned previously that there is plenty of money within the property world, with private investors looking for better returns than they can in bank savings.  There are also plenty of bounce back loans within the property investor community, and both of these options aren’t acceptable to many less specialist lenders.  Even having a BBL in your account could present a problem, so if you want to take advantage of these funds then you need to know where to go.
  • You have far more choice of how to structure your limited company in terms of SIC codes, number of directors/shareholders and group structures.  Often less specialist lenders have restrictions around this that can cause issues with the way your company is set up.

As always, if there is anything you want to chat through then give us a call.  Enjoy your weekend – the evenings are lighter and things are definitely on the up!

 

Jackie’s summary: What a year it’s been!

Happy Friday everyone… and it does feel like the one way ticket to ending lockdown is really on its way. It’s been a long time coming but finally there’s light at the end of the tunnel!

As we are now starting to get our vaccines and life is about to get back to normal, I though I would reflect on how the business has been for the last year.

Lockdown started on 23rd March and investors were super busy trying to get properties through and start buying new ones, we had a lot more at auction than usual too.  Perhaps having had Brexit for 3 years, followed by the election; COVID wasn’t going to stop you any longer. Usually, during a downturn, property and finance are hit hard; this hasn’t happened during COVID at all.

Apart from the initial valuation issues and lenders pausing lending for a short period, it bounced back very quickly. For those of us who remember previous economic problems, it has taken a lot longer for normality to resume historically so I think this took us a bit by surprise. The days of the last lockdown full of confusion of what we can do seem like a distant memory thank goodness.

What has inspired me through this is just how inspiring our clients are. It’s very easy to batten down the hatches when things get tough, but the courage and energy of our clients really has blown me away.

We have funded everything from the vanilla refinance, through small refurbishments and all the way to full on development – and everything in between. There were challenges with each deal, and it’s been our solid relationships with lenders which has enabled us to deliver on what our clients have needed. Each day brought new lender decisions and criteria so it really was a tricky time!

With all the issues from furloughed staff, lack of seeing and speaking to people, then coping with part time staff around home schooling (of which I helped with), it’s certainly been one of my most challenging years. There have been so many positives though, for example I have never had so many conversations with underwriters and lenders. Perhaps we all needed more than a quick chase up conversation.

As you will know from my previous blog, it has also given me the push I needed to start my own development. As busy as the year has been, I have spent more time listening to people and being mindful of just what we can still learn. Having something else to focus my time in has been really important, and I’ve thoroughly enjoyed it so far – although I’m sure the hard work is to come we haven’t started the development yet!

The lenders have also become so competitive. After the initial drop out of some, so together with the bullish attitude of others, we are able to now offer better deals than ever.  Also, by spending the time in lockdown conversations, we have really benefitted by having sensible discussions that can help with getting a deal across the line or working through getting a better LTV.

Overall, this year has really shown us just how amazing our industry is at bouncing back – both from a lending point of view and investors. We feel so privileged to be part of the industry who have been able to take advantage of this situation which has caused so many problems for so many. I really hope that this year will change the way we view situations too; we are all becoming more understanding of each other’s difficulties and challenges and I hope that we will continue.

There are always winners and losers in tough times.  I really believe that the tenacity of the investor community has shown just how resilient we are.  Onwards and upwards to June 21st and stay safe.

Case study: When you need 75% on a tricky semi-commercial property

It’s Friday again everyone.  I hope all of our working home schoolers are asking for as much help from relatives/friends as you can.  I decided to take on Ellie’s daughter’s schooling for RE…  With no children at home, I really didn’t understand just how time-consuming home schooling was.  I’m only doing 2 hours a week, but if a few people can do zoom lessons, it really does help in more ways that you can imagine.  Employer empathy and support is key to keeping good staff in a healthy mental state at the end of this tough time.  We all need to dig deep.  I took my actions from watching the Ernest Shackleton Antarctic trip in 1915…. Absolute team work is key to long term survival.  It’s worth a watch for some inspiration.

So to the weekly blog.

As it is the last of the January case studies, this week it is on a refinance of a semi commercial property.

The property is in London, has been extensively refurbished over the last few months, extended and fully tenanted out.  As you are aware, using commercial rent can be difficult during this time, particularly if you need 75% loan to value!

If you want the maximum LTV, then comprehensive knowledge of the property and client is key.  Most commercial rent cannot be used if the tenant has not been trading in lockdown – which for some industries was sadly not an option.  The tenant also needs to have been trading for more than 12 months and have a minimum of another 12 months left on the lease.  This particular commercial tenant had another food shop, so able to trade.  They were expanding and had just signed a new contract at our property, which was a problem for this lender.  In anticipation of the lender’s questions, I extensively researched the viability and quality of the incoming tenant so I could satisfy myself it was worth a ‘fight’ with underwriting.  That included websites, social media, reviews – all angles covered.

This all started before Christmas when, as you are probably aware, lenders were super busy.  The underwriter was honestly one of the best (Greg Barnard of Hampshire Trust Bank) and happily called me to discuss the detail; which can resolve things so much more quickly and easily than a long string of emails.  With some fine tuning of information, we had our offer at 75% LTV.  This gave us a super happy client and completion should be today.

I know we keep bleating on about this, but knowing your lender’s true appetite it is so important to the outcome of the case. 

The other important part is having a really good team at the solicitors (Nicola Watson, Naomi Williams and Eva Ciunkaite at Paris Smith). They can make or break transactions – opt for a ‘cheap’ option and you can really end up paying more.  They have worked tirelessly, 6 days a week and their communication is top drawer as well. Thank you, ladies.

Baya are still able to complete refinance cases in a reasonable time – lender dependent still before end of March.