United Trust Bank was approached by a company wishing to acquire a substantial, unmodernised detached house situated on a large plot in an affluent area near Sandown racecourse. The purchase price was £1.2M and the company wished to borrow the full purchase funds.
The owner of the company was an experienced builder/developer and his intention was to apply for planning consent for a scheme of luxury apartments on the site.
The owner of the company was able to provide additional security for the loan by way of third party 2nd charges against 2 other properties he owned. Both of the additional security properties were previous build projects he had completed. One was a new, three storey semi-detached house built on the grounds of an adjacent property. The other was a two storey detached house that was a former bungalow to which an extra floor and a single storey rear extension was subsequently added.
The exit for the loan was the sale of the additional security properties which both had sufficient net equity to repay the loan in full. The UBO owned a portfolio of 3 other buy to let properties and was to reside in one of these upon the sale of his existing residence.
The facility was provided in 2 tranches. An initial tranche to provide the 10% deposit in order to exchange contracts for the purchase of the Sandown house and a second tranche provided a few weeks later to enable the development company to complete the purchase.
Loan facility: £1.4m