Heavy Refurbishment Finance for a Six-Bedroom HMO
Case Summary
A property investment company secured a heavy-refurbishment facility to purchase and convert a £310,000 Hampshire property into a six-bedroom, six-en-suite HMO, with funding structured around the acquisition, works programme and projected £500,000 GDV.
Purchase / Property Value
£310,000
Loan Amount
Total Facility Amount
£317,220
Deposit / Client Contribution
Loan to Value (LTV)
75%
Finance Term
12 Months
Case / Finance Type
Bridging and Refurbishment Finance
Case Circumstances
The client was a property investment company purchasing a Hampshire property for £310,000 with plans to convert it into a six-bedroom, six-en-suite HMO, including an extension and major refurbishment. The estimated GDV was £500,000, with a works budget of approximately £120,000. The facility provided a maximum day-one net loan of £240,000 at 75% net LTV, together with £71,000 towards the refurbishment, resulting in a total facility of £317,220. Interest was rolled up rather than paid monthly, helping preserve cash flow during the refurbishment period. The remaining project costs were supported through company resources, directors’ loans, investor loans and equity released from other properties.
Main Challenges
Substantial Refurbishment Programme
The project involved a major refurbishment and extension to create a six-bedroom HMO, requiring a finance structure capable of supporting both the acquisition and a significant works programme.
Lender Valuation and LTV Limits
The finance needed to remain within the lender’s valuation and LTV parameters while still providing enough funding for the acquisition and a meaningful contribution towards the refurbishment costs.
Funding the Remaining Project Costs
The refurbishment budget exceeded the dedicated works facility, so the client needed to demonstrate sufficient funds for the deposit, initial works and remaining project expenditure.
Browse other Mortgage Case Studies
Case Summary
After completing the refurbishment of a six-room HMO in South West London, the borrowers needed a long-term buy-to-let mortgage to exit their bridging finance. By placing the case with a lender better suited to specialist HMO valuation, a revised valuation of £880,000 was achieved and a mortgage offer of approximately £660,000 was secured.
Purchase / Property Value
£880,000
Loan Amount
£660,000
Case Summary
A property investment company secured a heavy-refurbishment facility to purchase and convert a £310,000 Hampshire property into a six-bedroom, six-en-suite HMO, with funding structured around the acquisition, works programme and projected £500,000 GDV.
Purchase / Property Value
£310,000
Total Facility Amount
£317,220
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
Total Facility Amount
£236,000
Case Summary
Two directors purchased a £627,500 single-let investment property through a newly established SPV limited company. Despite the new SPV structure, one director being a first-time landlord and the property’s higher flood-risk profile, a suitable lender was identified and the clients were able to proceed with the purchase.
Loan Amount
£470,625
Purchase / Property Value
£627,500
Case Summary
A couple buying their first home required a £213,750 mortgage on a £225,000 property with only a 5% deposit. Although several factors narrowed their lender options and made the required borrowing difficult from an affordability perspective, careful lender selection enabled them to secure the full amount with a competitive high-street lender.
Loan to Value
95%
Deposit
£11,250
Case Summary
Two applicants on visas were looking to purchase a £250,000 property with a 5% deposit. Both had lived in the UK for less than three years, worked on fixed-term contracts and had limited UK credit history.
Loan to Value
95%
Deposit
£12,500
Have a similar scenario?
Let’s talk it through.
Let's Find the Right Mortgage for You
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.