Structured Refinance of HMO Bridging Loan to 5-Year Fixed Facility

The Requirement:

We were approached to assist with the refinance of an HMO in Chester, currently held on a conversion bridge. The property was operating as a 6 bed HMO, with the potential to become 7 bed subject to final planning approval.

The key objectives were to:

• Exit the existing conversion bridge.
• Move onto a 5 year fixed, long-term investment facility.
• Maximise the loan size by capturing the uplift from a potential seventh bedroom, without delaying the refinance.

About The Property:

The property:

• Was trading as a 6-bedroom HMO at the time of approach.
• Had undergone extensive refurbishment and presented to a high specification throughout.
• Was awaiting a final meeting with the local planning officer to determine whether planning for a seventh bedroom would be granted.

How we helped:

We structured the refinance to start immediately, while still allowing for the upside from the additional bedroom:

• Identified a lender able to instruct a valuation on both a 6 bed and 7 bed basis
• Began the refinance process while planning was still pending, avoiding unnecessary delay in exiting the bridge.

When planning permission for the seventh bedroom was granted, we were able to:

• Flip to the 7 bed investment valuation, reflecting the higher value and rental income.
• Finalise a £465,000 facility on a 5 year fixed basis, in line with the client’s requirements.

The Outcome:

• Enabled the client to start the process before planning was determined, while still benefiting from the uplift once approval was granted.
• Aligned the borrowing with the enhanced value and income profile of the completed 7 bed HMO, delivering a long term funding solution tailored to the client’s strategy.