£289k bridging loan for property purchase and conversion to HMO

United Trust Bank was approached by an experienced property professional to assist with the purchase of a three storey, three-bedroom mid-terraced house with a view to converting it to a 6-bedroom HMO.

The borrower held a small portfolio of investment properties, including similar HMOs, and the valuation together with our own research gave us comfort that the property and area were suited to an HMO and the projected conversion costs and works timeline were reasonable.

The Bank initially advanced 60% of the current property value of £322,000 to cover the balance of the purchase costs and the loan fees which the borrower elected to add to the loan. The full cost of works, estimated at £80,000, were to be made available in two tranches of
£40,000 each.

Once complete the property has an estimated value of £630,000, based on the anticipated rental yield post conversion, and the borrower plans to exit the loan by refinancing with a long-term mortgage.

BorrowerInvestor – Developer
Loan TypeBridging Finance
Term12 months
LocationNorthern Home Counties
Project typeProperty acquisition and conversion to HMO
Special Features– Property purchase and conversion costs

– Cost of works provided in two tranches

– 60% of current property value provided towards purchase