Auction Purchase with Full Refurbishment Funding for an HMO Conversion
Case Summary
An experienced property company purchased a Hampshire property at auction for approximately £198,000 and secured a combined purchase and refurbishment facility to support its conversion into an HMO. Around £100,000 was allocated to the refurbishment works, enabling the project to proceed towards a planned buy-to-let refinance.
Purchase / Property Value
£198,000
Loan Amount
Total Facility Amount
£236,000
Deposit / Client Contribution
Loan to Value (LTV)
Finance Term
8 Months
Case / Finance Type
Bridging and Refurbishment Finance
Case Circumstances
The client was an experienced property company purchasing a Hampshire property at auction for approximately £198,000 with the intention of converting it into an HMO. A total facility of £236,000 was arranged, including an initial gross advance of approximately £136,000 and a refurbishment facility of around £100,000, released in stages as the works progressed. This represented approximately 100% of the planned refurbishment budget. The remaining purchase costs were supported through a combination of directors’ loans, investor funding and funds released from other properties. The planned exit was a refinance onto an HMO buy-to-let mortgage once the works were completed.
Main Challenges
Strict Auction Completion Deadline
The auction purchase required funding to be arranged within a fixed and relatively short completion timescale, making speed and certainty of funding particularly important.
Substantial Refurbishment Required
The property required significant works before it could be converted into an HMO and begin generating the intended rental income.
Funding the Refurbishment Programme
The finance needed to support both the acquisition and a substantial refurbishment programme. Approximately £100,000 of the facility was therefore structured for staged release towards the works.
Multiple Sources of Purchase Funding
The facility did not cover all of the acquisition costs directly, so the remaining funds needed to be supported through directors’ loans, investor funding and capital released from other properties.
Defined Refinance Exit
The short-term facility relied on a planned exit through an HMO buy-to-let refinance following completion of the refurbishment, so the project and exit strategy needed to remain aligned.
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Amir Shojaee
Director and Founder of PBSBrokers
CeMAP Qualified Mortgage Adviser
At PBSbrokers, we offer a free initial consultation to review your income, deposit, affordability, credit profile, and mortgage objectives. Whether your case is straightforward or more complex, we'll help you understand the options that may be available and guide you through the next steps.