Case Studies | Searchlight Finance

Recognise agrees £1.16m loan for complex multi-property portfolio deal

Rental portfolio acquired through company purchase.

Recognise Bank has financed the complex purchase of a portfolio of buy-to-let properties with a £1.16 million loan.

The properties on a housing development in Worksop, Nottinghamshire, were owned by a limited company. Rather than buying the properties directly, Recognise supported the borrower in acquiring the company, and thus ownership of the rental portfolio. This saved the client a six figure sum in Stamp Duty Land Tax.

Broker Simon Allen of Searchlight Finance brought the case to the Bank after being frustrated at the struggle to find a suitable lender. Even though the borrower, Kevin McDonnell, is well-known in the UK property industry for structuring similar creative deals, Simon found that many lenders still would not look at the deal because of its complexity.

In the transaction, the existing company directors and shareholders exited the limited entity and the Bank’s clients stepped into their positions. The process involved several sets of solicitors and a higher level of due diligence compared with a standard BTL deal.

Simon Allen of Searchlight Finance added: “Large loans are our bread and butter, and whilst it was a complex deal for some, we knew the transaction could be done due to our experience dealing with property investors. Recognise were a joy to deal with and were positive all the way through the process.”

Source – Recognise Bank Press Release

Successful Completion: Mortgage Secured for Multi Unit in Croydon

Helping Property Investors Achieve Their Goals

🌟 Mortgage Completed for Portfolio Landlord

We’re pleased to announce the successful completion of a Buy To Let Multi Unit Freehold Block for an existing Portfolio Landlord in Croydon. This deal is another example of how we support property investors to grow their portfolios.

📍 Property Details:

-Type of Property: Multi Unit of four units with eight bedrooms with a commercial valuation
-Location: Croydon
-Value: £1,100,000
-Loan-to-Value (LTV): 75%
-Mortgage Type: Interest Only for 35 years

🏦 Issues to Overcome

Damp in the cellar. Many lenders would get their valuers to decline the property if any type of retention is required.

Whilst the valuation recommended works that would cost £10,000 when the specialist reports came in £40,000 was quoted.

Working with the client we negotiated with the lender that most of the works weren’t required to make the property mortgageable and to rectify the initial damp identified which saved the client £30,000.

Successful Completion: Mortgage Secured for Multi Unit in Kent

Helping Property Investors Achieve Their Goals

🌟 Mortgage Completed for Portfolio Landlord

We’re pleased to announce the successful completion of a new build Buy To Let Multi Unit Freehold Block for an existing Portfolio Landlord in Kent. This deal is another example of how we support property investors to grow their portfolios.

📍 Property Details:

-Type of Property: Multi Unit of seven units with twelve bedrooms
-Location: Kent
-Value: £1,500,000
-Loan-to-Value (LTV): 50%
-Mortgage Type: Interest Only for 30 years

🏦 Issues to Overcome

The lender we selected had a maximum number of six units for their product which had a fixed fee which is rare as most are percentage based.

We discussed the case with both the sales team and underwriters prior to submission and asked if they would make an exception to their policy which they agreed.

This saved the client approximately £28,000 over the five period of the product compared to the next option.

Commercial Investment Mortgage

Background

An established residential landlord in Birmingham wanted a commercial mortgage to buy his first commercial property which was rented out to a supermarket. His bank had said no as the existing tenant only had two years left on the lease and they wanted a longer lease. He had approached other brokers who had found finance which was double the amount he expected to pay.

Our Solution

The tenant had been in the property thirteen years and had just carried out an expensive fit-out. This gave us comfort that the tenant wanted to stay at the property. As our client wanted to retain the tenant, we suggested that a new lease be created at completion which would help secure finance and keep the tenant.

Result

The £600,000 loan was agreed with a high street bank as the lease was now longer, at a rate which was very competitive.

Remortgage of BTL Portfolio in Lancashire

£330,000 refinance from a bank that says No!

Due to the age of the applicants, their existing lender had given notice to a long-established Lancashire property company to move it’s property portfolio to another bank or sell.

The directors were in their 80’s and spent most of their time overseas and didn’t own a main residence in this country. To add to this, their tenants received housing benefit which some of the banks didn’t like.

We kept in constant contact with the outgoing lender and updated them at every stage. This gave the bank the confidence to grant extra time in a complicated restructure.

Never to back away from a challenge, we arranged with the directors for a UK based relative to become a director. This gave a new bank comfort in succession planning and where other brokers had failed we obtained the finance needed. The properties have been retained giving the clients a comfortable income in their well-earned retirement.

HMO Mortgage – First Time Landlord

The Issue – A first-time landlord with a 7 bed HMO was told by a specialist HMO broker they were not mortgageable due to lack of experience. They had a property worth £400,000 which they wanted to remortgage at 75% LTV after an extensive refurbishment. They were concerned they would have to wait two years before they could release the money they had in the property.

The Solution – We have access to a lender who will do HMO mortgages up to 8 beds for a new landlord at competitive rates. The previous broker thought their maximum was 6, so through our knowledge, we now have a new client and happy landlord who has now moved onto her next property.

Not rocket science but by understanding the market we know where to go and how to ask the right questions.

Case Study for New Build Flats

A Cheshire based company had built four apartments with total land and build cost of £200,000 and the properties were valued at £440,000.

Lenders had been approached by our clients and all were either not interested as they were property developers, or wanted them to leave some of their money in the project so they only had had access to a maximum loan of £180,000. This was seriously going to affect their future projects and expansion plans.

By getting to know their medium and long-term strategy we presented this to a specialist property lender. By outlining their plans the lender was satisfied that the company had a long-term viable plan which they wanted to support and offered 75% of the value to them. So we have two happy directors who now have an extra £150,000 to go towards their next project.

Case Study – Residential Development Finance

An experienced developer had been declined by their bank as they felt they were doing too many developments (this was the third!) so refused to lend. Based on the previous track record and their professional team a loan of £500,000 was agreed which was 65% of the current value and 100% of build costs and fees was agreed with a specialist property lender. Don’t always take no for an answer!

Case Study: Short Term Loan for Addition of another BTL to Portfolio

Shawbrook is pleased to report the completion of a short-term loan at 55% LTV, for a client of Strategic Partner ‘Searchlight Finance’. The purpose of the loan was to raise funds for the purchase of another investment property, with the client having very recently transferred ownership of a buy-to-let (BTL) property from their individual name to a limited company via a special purpose vehicle (SPV).

Shawbrook has completed on loans for a number of clients in a similar position, establishing an internal support framework which can process SPV transactions as efficiently as possible. In this case, the broker’s client already had another loan with Shawbrook, enabling them to benefit from the Existing Customer Discount and expediting the application process for all parties.

The client was initially unable to provide the shareholding structure of the new SPV to the Bank, because they were awaiting the appropriate security codes from Companies House in order to update their annual return documents. As Searchlight’s client was known to the Bank, Shawbrook was able to take a pragmatic view and issue the IMO without this information, making it a pre-completion requirement instead.

There were some initial discrepancies concerning the property title plan, whereby the documentation provided seemed to indicate the footprint of buildings previously on site and not forming the boundaries of the newly built development. This created difficulties for our legal partners at Pure Law in terms of finalising a definitive boundary plan, but these were overcome by the efforts of both the Shawbrook lending teams and Searchlight Finance.

With open communication channels ensuring all outstanding information was shared as needed, the Shawbrook lending teams were able to move to completion to the satisfaction of the client.

The broker, Simon Allen from Searchlight Finance, commented:

“My client was pleased with the outcome of their application process with Shawbrook and, as a repeat customer, is open to seeking finance from Shawbrook again in the future.

“From a broker’s standpoint, the interaction with Shawbrook lending teams was as Searchlight Finance has come to expect – expert, pragmatic and always able to take an informed view throughout the lending process.”

£330,000 refinance from Yorkshire Bank

Due to their withdrawal from the market Yorkshire had given notice to a long established Lancashire property company to move it’s property portfolio to another bank or sell.

The directors were in their 80’s and spent most of their time overseas and didn’t own a main residence in this country. To add to this their tenants received housing benefit which most of the bank’s didn’t like.

Due to our dealings with the Banks we kept in constant contact with the outgoing lender and updated them at every stage. This gave the bank the confidence to grant extra time in a complicated restructuring.

Never to back away from a challenge we arranged with the directors for a UK based relative to become a director. This gave a new bank comfort in succession planning and where other brokers had failed we obtained the finance needed. The properties have been retained giving the clients a comfortable income in their well earned retirement.

£500,000 Residential Development Finance in London

Experienced developer had been declined by its bank as they were not lending in the sector. Based upon previous track record and his professional team a loan of 100% of build costs and fees was agreed with a specialist property lender.

Auction Finance in Leeds

We were approached by a residential mortgage broker who had a client that had purchased a residential investment property at auction. They thought they would be able to obtain finance from their bank but their request was declined.

Due to the tight deadline bridging finance was considered but we were confident that we could raise long term finance within the time limit. The loan application was received and due to our strong relationship with Shawbrook we rang them to ask them to put it to the top of their workload. This was done and we obtained agreement. As a partner of Shawbrook we are able to instruct valuations so the valuer was then instructed and visited the property the next day with the valuation report being received the day after.

A formal offer was then issued and it was down to solicitors to finish the hard work that all parties had put in. As we are copied in on all solicitors correspondence issues were identified early and dealt with quickly.

The deadline was achieved and the clients now have a new addition to their property portfolio.

Bridging Finance in London £900,000

A corporate finance house in Manchester had a client who was buying a business in the South West. They had been let down by a Venture Capital company and were looking for alternative funding. The purchaser had a property with no mortgage and wanted to obtain a bridging loan of £900,000 quickly.

Other lenders and brokers had already been approached. Initially we gave an overview of the lenders that had offered finance and outlined the positives and negatives to the loans and the lenders.

As the repayment was to come from the sale of the property we considered lenders that would offer extensions to the loan if the sale took time. Cost was also important and knowing that the lender had the money to complete.

Due to our experience in the sector and detailed knowledge of the lenders we were chosen to source the finance and the client obtained a 12 month loan, interest calculated on a daily basis with no exit fee.

The house is on the market and they now own a very profitable business.

Bridging Finance for Auction Purchase

We were approached by an IFA who had tried to obtain bridging finance of £350,000 on a property bought at auction. The client and IFA had approached lenders direct and the IFA had gone to a specialist bridging firm who couldn’t help.

A 10% deposit had been paid at auction and we had less than two weeks to obtain the finance. The buyer was very anxious about losing the deposit and being sued by the seller.

The property was almost derelict and was putting the lenders off. We found out early on that the family were wealthy and had other assets including a profitable hotel which was available as security.

We approached several of our lenders and we met with the owner of the bridging company chosen and gave a presentation to them which explained the transaction in detail and outlined all the risks. Due to this they didn’t want a valuation and the money was released the day before the deadline.

We negotiated the ability for the business to reduce the debt during the period of the loan to lower interest costs and the house is now being restored and will be back to its former grandeur in the Derbyshire countryside.

Buy to Let Remortgage

Manchester based property investor required a buy to let loan to repay bridging finance. Due to his profession and the large number of properties he owned within his existing portfolio he had been turned down by lenders.

The bridging company was putting pressure on the client for repayment. We quickly sourced an alternative lender from our specialist property lender panel and repaid the bridging loan.

Bridging Loan in Devon £412,000

Bridging loan to Torquay based developer to repay existing development loan with another lender which had expired. Introduced to us by their residential broker.Negotiated with lenders to reduce the number of properties held as security thus maximising remortgage options and reducing the amount of interest charged.

Agreed over a nine month term which was sufficient time to sell or remortgage further units without the pressure of distressed sales.

Commercial Mortgage for a Day Nursery

We were introduced to a Cheshire based day nursery group. They had a recent history of low profitability and losses due to “tax planning”. They required a commercial mortgage to move premises as they had outgrown their current home.

Due to the lack of profits in their accounts, they had been declined by several lenders. We explained in detail where the money had gone over the last three years, added back several items of one-off expenditure and compared it to the historical performance of the business. This ensured the commercial mortgage was agreed by a lender they had already approached at a lower interest rate. We knew how to present the application to them and the children and staff are now enjoying their new setting.