Good relationship leads to flexibility following lower valuation

Customers with a good track record of borrowing from United Trust Bank approached us to fund the purchase and development of a site with detailed planning permission for 10 flats.

The approved floor layouts were not the most attractive however the borrowers proposed to reorganise the internal layouts to produce accommodation which would be better received in the market place.  We were additionally influenced by the location of the site which has a mainline railway station and several bus routes within a 2 minute walk. In our view the finished units were likely to appeal strongly to both the owner occupier and rental markets and this offered the prospect of an alternative exit via refinancing if sales were unexpectedly slow.

A facility of £1.46m equivalent to 55% of GDV was subsequently agreed.  The valuation came in a little below our expectations such that the facility equated to 57% of GDV. Given our past experience of these borrowers we were content to continue with the loan at the original level.