A Cheshire based client, a High Street banker with no property development experience, approached Genie Lending for property development finance for a small project.
Planning for her retirement, she had had the foresight to obtain planning permission for the construction of a second bungalow on a plot of land that she could separate from her large back garden. Making use of land that was surplus to requirements, if she could raise the finance to develop the bungalow, she could still have a great living space in her 3 bedroom home, but make a profit from the sale of the second property and thus significantly reduce her mortgage and allow her to enjoy her retirement with a far easier financial situation.
Our client’s property was worth £350,000 and she had a mortgage of £112,000 outstanding. A fixed price contract of £80,000 was agreed with her experienced local builder for the construction work, but she had no cash to put into the transaction. 100% of the build costs needed to be financed to allow her to proceed.
Genie Lending was able to structure a development finance loan for the full £80,000 of build costs and the selected lender was able to roll up the interest due as well as their fees so that the full cost of the project could be repaid when the bungalow was ultimately sold. All our client had had to find were the costs of getting the loan in place, legal and otherwise.
The loan was advanced in September and the builders are now on site. The build time is forecast to be 6 months and with a further 3 months’ sales and marketing time, our client is expecting to realize her profit of £100,000 by next summer and reduce her residential mortgage, allowing her to have a far more relaxing retirement, freed of the worry of a large mortgage.