New build / Developer has first charge / Refinance on completion

You’ve self-funded and cash-flowed your own new house, the developer has a charge on it, and the banks are saying you need to wait 6 months to be able to remortgage it!

The challenge

• Bought land from developer 18 months ago.
• Agreed to pay for the land upfront and then cashflow the build to the developer.
• Developer had first charge on the land and property.
• Income mainly from commission and bonuses.
• The lenders he approached said he would have to wait 6 months from the time the house was ready / at practical completion to refinance.
• The developer would not agree to this as the refinance was to repay the developer for the last large part of the build.

The solution

• A lot of the lenders he had approached didn’t quite understand the situation. In fact we ended up using a lender who the client had already approached as they hadn’t explained the situation properly.
• The lender was fine once they knew the land had been owned for 18 months, irrespective of when the house was built. This completely unlocked the refinance, and the timing on when this could happen, meaning the developer could get repaid and release their charge.
• The lender was happy to take averages of the commission and bonuses which bolstered the lending amount to the level required.

After thought

We know how to speak to lenders in their language. Quite often we see clients in unusual circumstances attempting to arrange the finance themselves only to be told they can’t be helped by a lender, when in fact it was simply down to explaining it in terms a lender could understand! We speak finance so you don’t have to!

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David was absolutely amazing, from helping us find the right mortgage, to advising us, to being on hand for silly questions we had. Nothing was too much trouble for him. I will absolutely be recommending him to our friends.

Frederica Turner