Business couple use equity in their family home to seize a development opportunity

United Trust Bank’s Bridging team were approached to assist a couple in the purchase of a piece of land with planning permission for the construction of two new family homes.

The husband and wife team jointly owned a limited company which would be the legal borrower and the owner of the land being purchased. However, the principal security for the loan would be the couple’s personally owned family home.  Their home, a former public house, had a substantial garden and the borrowers had recently obtained planning permission for the redevelopment of the site to include the demolition of the house and the erection of five new detached homes. Securing the permission had more than doubled the value of the property and there was strong interest in the site from local developers.

The couple’s plan was to release some of the increased equity in their home to fund the purchase of a site and purchase a site adjoining another property they owned which had planning consent for two, 4-bedroomed homes. The circa £1.4m loan requested would repay their existing first charge mortgage and fund the site acquisition.

The security provided was a 3rd party first charge against their current residence, and a first charge over the development site being purchased. Multiple exit strategies were provided, the most likely being the sale of their current home to a developer.

Although UTB only requested a valuation of the couple’s main residence, the borrowers also benefitted from the value of the site being purchased to reduce the overall LTV and therefore the cost of the bridging loan.