Commercial finance for low geared property

THE SCENARIO

It is always a pleasure to work with clients who are returning to Enness after a positive experience. I was recently able to assist a client who had previously used Enness Mortgages to arrange finance for his residential property.

After reading an article in our weekly newsletter, he now had a commercial finance enquiry which he wondered if he could assist with. Originally, my client enquired about an unsecured loan for his business. However, it transpired he already had a loan with the lender I was considering, and they were not open to extending his facility with them.

OUR SOLUTION

Fortunately, after reviewing his assets, I was able to suggest another commercial finance solution. My client had a commercial property with low gearing, so I proposed that we attempt to secure more money against this asset. He bought the property several years ago for £1.2million, and it was now worth approximately £1.5million.

His current lender, a high-street bank, also did not wish to extend his facility. Although he had been running a successful business for many years, he had shown a loss in the last year as he had lost an NHS cleaning contract due to government cuts. Furthermore, this lender has a preference for taking on new business over extending existing facilities. This was incredibly frustrating; it was the first time he had shown a loss for many years, having been running his business for over 25 years.

I therefore approached another lender, and they were willing to extend his mortgage from £700,000 to £1million.  As his property had increased in value, this still created a low loan to value, so I was able to secure a favourable interest rate.

Clients sometimes approach us with a solution in mind, only to discover that this is not suitable for a variety of reasons. However, when this occurs, we will always endeavour to work creatively to find another solution—this case is a fantastic example of this.