Our clients were existing commercial property owners, but wanted to capital raise against their existing property with the funds to be used as deposits on further purchases.
Funding requirement: to raise as much as possible at an acceptable interest rate on the existing property and with the same lender to provide funding against the new properties being purchased.
Facility provided: we were able to source a variety of potential funding lines for the clients with a trade-off between the level of gearing against the property and the pricing. The clients decided that the best combination was from one of our smaller bank contacts that could gear to 55% of the £2m property value at an all-in rate of 3.7% p.a. based on the rental of £120,000 p.a. There were lenders that could offer lower rates, but with lending around 45% of the property value, or lenders that could offer up to 75% of the property value, but with rates around 6% p.a. However, for this client the mid-ground gave them the funding level that they needed and at an acceptable interest rate.