Using a residential property to raise funds for business purposes is a challenging proposition, but with the right lender, it can be successfully achieved.
After reading about Enness in a weekly financial newspaper, one of my recent clients approached me in the hopes of achieving the above. My client was self-employed and had run his own business for many years, a business which had recently undergone global expansion.
My client hoped to release funds against his property for business purposes, but did not want this to impact on the first charge mortgage on his property, which was tied in until 2019. The property in question, located in Warwickshire, was valued at £950,000.
However, as a result of his business’ recent expansion, the cash flow on his business accounts were not looking favourable. He was therefore finding it difficult to secure the loan he wished to achieve.
Fortunately, I was confident I would be able to help. After an assessment of his situation, we were able to clearly explain to lenders that the funds used for global operating costs were already showing favourable future returns; in the last three months they were already making a profit. The long-standing nature of his business placed my client in good stead.
I therefore approached a lender who allows maximum loan to value (LTV) charges against residential homes for business lending. I negotiated with them to arrange a second charge mortgage at 80% LTV, on the basis my client provided an accountant’s certificate to evidence his projections for the next two years.
We arranged a second charge for a 15-year term, with no early repayment charges. This lender takes a manual underwriting approach, which was exactly what was needed in this scenario. As opposed to using tick-box criteria, this lender assessed the case on its individual merits.
If you feel your case could benefit from a manual underwriting approach, please don’t hesitate to get in contact with me for a further discussion of your situation. Our lender network enables us to succeed with unusual cases, no matter the complexity.