Using a new development property for security on a multi-purpose loan

Our customer is a West Country property development company which sources local sites to develop. It had recently completed the construction of a 5 unit development all of which had been sold except for a 3 bedroom house. The company was looking to pay down various accounts, settle some tax affairs and free up equity for its next project.

The Bank was willing to advance the monies even though the kitchen had not been fitted as this will be chosen by the eventual purchaser.

Noting that there was good demand for such properties and that the other four units had already been sold, the Bank took a first charge over the last unsold property and a personal guarantee from the shareholder. The total loan amount was £181,300 with a LTV of 57%.