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Shawbrook helps experienced investor with new “Lending for Refurbishment Costs”Case highlights bank’s new product where investors can access 100% of the refurbishment costs for short term projectsShawbrook were approached by Strategic Partner B2B Financial with an experienced customer seeking short term finance on an auction purchase. The loan of £207,750 was secured against a property value of £300,000, and a purchase price of £277,000 (75% LTV). Thanks to Shawbrook’s innovative new product addition allowing customers to access 100% of the refurbishment costs, the bank was able to offer 85% LTV (£235,450) which allowed £27,700 in costs to be covered under the facility, delivering a material benefit to the customer in terms of cash flow.
This was completed on the STL1 residential light refurbishment product on a 12 month term with serviced interest. The teams were under pressure to hit auction timelines and with B2B Financial working closely with the Shawbrook underwriting team, this application journey was completed in just 16 days from start to finish.
Having benefitted from the Shawbrook “Existing Customer Discount”, which is available on the margin or the arrangement fee, the customer is now looking for a longer term solution once the works are complete. This represents a superb example of Shawbrook’s “bridge to let” offering, and serves to highlight the importance of lender, broker and solicitor working closely together across the customer journey.
The customer plans to exit by switching to a Shawbrook term loan once this project is complete, the advantage being no additional fee and the ability to borrow against the new GDV to 75% LTV. This creates further cash flow benefits and opens up more investment opportunities as a result.
Adrian Rawle from B2B Financial comments;
“It’s encouraging to see this kind of innovative product hit the market at a time where the BTL landscape faces some real challenges. The lending for costs option really fills a need in the market and the 16 day completion timeline was quite superb. Our client is delighted with the outcome and we are grateful to Shawbrook for making this an incredibly slick process with excellent service all round”.
Gavin Seaholme, Head of Sales for Shawbrook Commercial Mortgages added;
“We were really pleased to bring this product to market over the summer and it has generated significant traction already. With research just in from our 2018 Buy-to-Let Report that indicates a slightly dampened market, forward thinking products like this allows the professional investor and landlord community to continue to build and grow, and we are delighted to be able to facilitate this”.Shawbrook Bank products can be accessed via the PT Brokers Team, who can be contacted on 0333 363 6507.Here is a reprise of our interview with Ray Bougler of John Charcol about refurbishment finance:
SEE ALSO - Shawbrook Buy to Let Report 2018UP NEXT - No money down BTL purchasesDON'T MISS - Top 12 Property Tribes refurbishment resources for developersNOW WATCH:
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
Shawbrook helps repeat client with their long term property investment strategyCase highlights bank’s bridge to let to term finance optionsShawbrook were approached by Broker Partner Sterling Knight to help a client purchase two adjacent blocks compromising of 18 flats in Birmingham worth £1.7m. The clients were looking for a short term loan of £1.27m so they could purchase the flats in order to split them into leaseholds and either refinance for buy-to-let purposes or sell.The applicants were long-standing clients of Shawbrook and were delighted that the lender could help them with their new project. Shawbrook approved the loan on their STL1 product allowing the clients to purchase the flats at a discounted ‘block’ basis, all without tying up their assets. Once the flats were split into leaseholds, the clients sold a portion of the stock (at a refinance value of £120,000 each) and have refinanced the other flats, two of which onto Shawbrook’s RI0.1 product. This case proves that Shawbrook can support clients along their property investment journey.Paul Steel, Director at Sterling Knight comments;
“We were delighted to assist our longstanding repeat borrowing client with the purchase of this property, which allowed them to split the title onto long leaseholds and refinance several of the flats in Shawbrook’s specialist BTL term finance”.Sarah Woolf, Senior Development Manager for Shawbrook Commercial Mortgages added;
“Working closely with Sterling Knight, we’re delighted that we were able to help an existing customer with their long term property investment strategy. The original bridge to let loan helped the client to free up capital and the smooth transition from STL to term meant minimal cost and time incurred”.
I have had one very unsatisfactory dealing with Shawbrook when they changed the rules half way through my application and I lost £1500 on broker fees. I won't be going back.
Shawbrook fund £1.2m capital raise on new development in DorsetBank’s STL product helps client release funds for next project
Strategic Partner “Laybourne Finance” approached Shawbrook with a case from an experienced developer who had recently completed a new build development of six flats in Dorset. The client was looking to redeem his existing development finance and release some capital for their next project.
Shawbrook was able to provide the client with a loan of £1.22m, 75% LTV, against the aggregate value of the flats. The property had strong commentary from the valuer on both sale and lettings, and a term of nine months was agreed on the STL1 product with interest rolled up and included in the redemptions to allow the sale of the units.
Liam Keighley, Director at Laybourne Finance, comments;
“Shawbrook was able to meet the tight deadlines set by our client to prevent them from having to service their existing development finance. Not only were we able to refinance their debt onto a lower interest rate but also free up cash to allow them to secure other projects they are working towards. You can’t put a price on being able to pick up the phone and have a discussion with the underwriter, and Shawbrook’s flexibility is what allowed this deal to come through. Steve and the team at Shawbrook worked tirelessly to help this client and it cemented our relationship with the borrower, which is what we value most”.Peter Turner, Senior Development Manager for Shawbrook Commercial Mortgages added;
“As always with new builds there are challenges with the security, but Liam and Steve worked tirelessly with the bank and both sets of solicitors to ensure the process remained as smooth as possible so that we met the client’s expectations. Laybourne are a pleasure to work with as they are able to view each case from both the client’s and lender’s perspective to ensure all parties are happy. This was Steve’s first case and completion with Shawbrook and I hope it’s one of many”.
Shawbrook’s “Lending for Refurbishment Costs” product allows access to 100% of refurbishment costs on short term projects
Shawbrook Broker Partner “Baya Financial” completes conversion of 1 bed flat to 3 bed maisonette @ 85% LTVThis auction purchase came with a purchase price tag of £494,000 and a 28 day deadline, with the property requiring freeholder consent and a lease extension. The £49,400 cost of works was to allow internal reconfiguration of the rooms, moving the kitchen and bathroom to the ground floor, along with loft insulation and new flooring & decoration.
Unlike many providers, fees for this product are added to the loan which placed the customer at 86.95% LTV on completion. Funds for the works were released immediately and allowed the investor to carry out the necessary works in time to secure a monthly rental income of £1600 and add this property, now with a GDV of £650,000, to a growing portfolio.
In addition to borrowing 75% against the lower of day one purchase price or value, Shawbrook’s Lending for Refurbishment Costs option allows applicants to borrow up to 100% of the refurbishment costs on a single larger facility for light refurbishment projects across residential and semi-commercial security. In this case, all funds were provided on day one with no staged drawdown required. In this instance, a larger gross loan of £429,533 allowed the borrower to both purchase the property and complete the refurbishment project.
Commenting on this innovative product, Gavin Seaholme, Head of Sales, Shawbrook Commercial Mortgages;
“This new Short Term product addition is rapidly becoming a key string to the experienced property investors bow, allowing them to generate value and build their portfolio. We are delighted to expand access to this product feature across the entire Shawbrook Broker panel and look forward to seeing this help investors with their short term property ambitions.”
Eleanor Broadhurst from Baya Financial added;
“We have worked with Shawbrook for many years and have always liked their way of operating; they understand how investors work which is key to us as a broker. We were really excited to see that they had this new product and were keen to offer this new and innovative solution to our clients, allowing them to access more borrowing in order to build and grow. We have been really pleased as it is as easy to use as their other products.”
Commenting in support, Baya Financial’s investor client;
“Baya has excellent communication, knowledgeable staff and they always keep the momentum going. It is vital to my business that I am able to have complete trust in companies that I recommend, as this is paramount to my reputation. The auction purchase process went very smoothly, and I found Shawbrook so easy to deal with through Baya. I would have no hesitation in using the same product for my next purchase.”
The “Lending for Costs” product addition complements the lenders award-winning Short Term offering which retains the same key benefits such as a 0.25% existing customer discount, the ability to switch to a Shawbrook term product with £0 arrangement fee, and no minimum interest periods or Early Repayment Charges (ERCs).
Shawbrook’s “Lending for Refurbishment Costs” gathers momentumShawbrook Strategic Partner “Crystal Finance” completes latest refurbishment deal on innovative “100% of refurbishment costs lending” product.This £75,000, 3 bedroom property in Newcastle required complete refurbishment, including a new kitchen, bathroom, extensive electrical works and new flooring. The associated costs were estimated by a surveyor to be in excess of £12,000, but this experienced investor carried out the refurbishment himself in order to keep costs down and maximise profit.
A loan of £63,750 was secured at 86.7% LTV (including fees) to cover the £7,500 cost of works, with all funds being released on Day 1. The rental following completion of the works was £595pcm with a GDV of £110,000, and the investor moved to a term loan with Shawbrook for no fee, a smooth exit facilitated by Crystal Finance on behalf of the client. The valuation report included commentary on the properties initial value, the refurbishment works carried out, and the GDV and final rental yield. The same surveyor carried out the inspection for the term loan to ensure the necessary works were complete and ensure a consistent approach to valuing the property.
“It’s hugely gratifying to see our brokers take to this innovative addition to our Short Term lending range, and it’s testament to the knowledge and expertise of our panel that they have communicated this to their clients so quickly. When it comes to the Short Term market it is crucial to be able to act quickly and take advantage of new opportunities, and accessing 100% of the refurbishment costs opens up new doors for investors as they seek to build value and grow their portfolios”.
Managing Director, Jo Breeden from Crystal Finance added;“The key to this transaction was cashflow management. This product from Shawbrook allows the client to get the maximum leverage for his deposit and allowing a loan at technically 86.7% LTV all-in is market leading in every sense. This means the client can complete the refurb in as short a time as possible as funds are already there, and more importantly exit onto a preapproved term loan with no additional product fee.”
Shawbrook and their newest Strategic Partner, Clever Lending, have helped an experienced investor with a complete property journey, from purchase through to refurbishment and sale.Shawbrook was first able to assist the client with the purchase of a vacant commercial property for the price of £207.5k. The client is an experienced builder by trade and despite not having completed his own commercial to residential project, the specialist lender was able to proceed based on the client's trade experience and with positive commentary on planning from both the local planning office and the valuer.In late 2017, Shawbrook facilitated a product switch onto a refurbishment short-term loan, once planning had been gained, where the client was able to leverage against an increased value at 65% to capital raise the extra funds to carry out the conversion.Finally, in 2018 the bank was able to provide the client with a further product switch onto a 12-month STL1 for the purpose of marketing the property for sale.The client, Turrell Developments, commented:
“It’s great to deal with Clever Lending, they offer their knowledge of lenders and understand the details each project. Shawbrook made the journey through their product range straight-forward which took the hassle of ‘money worries’ out of the project, leaving me to get on with the conversion.”Sarah Woolf, Senior Development Manager for Shawbrook Commercial Mortgages also comments:
"We were delighted to be working with Clever Lending to assist the client on their property journey. Steve at Clever Lending worked closely with our Lending team to ensure that the process for the client was as smooth as possible and that they were able to maximise the opportunity that the purchase afforded them."