Helping small-scale developers cash in

ROGER MORRIS, SALES AND MARKETING DIRECTOR, AFFIRMATIVE FINANCE
ROGER MORRIS, SALES AND MARKETING DIRECTOR, AFFIRMATIVE FINANCE

Conversion, self-build, refurbishment and development finance are clearly the flavours of the month.

Perhaps the new-build housing market is not seeing what you’d call explosive growth in big developments but smaller scale projects are going strong.

But with ever-changing lender criteria, options for borrowers are not as numerous as they used to be.

For example, consider the following case of a client who may pose a problem for some lenders.

This client wants to buy a house that is in need of serious refurbishment. He wants to bring it up-to-date but the property is considered unmortgageable by most lenders.

But once a relatively small amount of money has been spent it is clear that the value of the property will go up dramatically.

The issue is that ownership rules require a client to retain a property for six months before a remortgage application can be submitted to mainstream lenders on a buy-to-let mortgage.

But an increasing number of lenders are becoming more flexible about remortgaging on a short-term basis. They understand that a property can increase in value in a short period due to its initial condition.

And there’s the same requirement for clients who want to buy a big house, convert it into flats and then remortgage onto a buy-to-let deal to get a good return on their investment.

These are just two examples of where short-term lenders can help brokers help their clients.