London Residential Refurb and Let

London 3 bed (1.3m) conversion to 6 bed (1.8m) conversion

Client: Always Wright Mortgages Limited Project: Refurbishment and conversion of a single-dwelling property into a high-specification 6-bedroom House in Multiple Occupation (HMO) in London. Challenge: To raise £550,000 in finance to clear the existing first and second charges on the property and fully fund the conversion works. The challenge was the existing debt structure and the need for a specialist lender understanding of the project's end value.

The Strategy & Solution

Always Wright Mortgages Limited identified a prime London property valued at £1.3m but encumbered with two existing charges totalling £550,000. Their strategy was to acquire the property, undertake a significant conversion to maximise its value, and ultimately refinance to a long-term Buy-to-Let (BTL) mortgage.

Recognising the need for speed and flexibility, they approached specialist development lender, MT Finance. MT Finance assessed the strong fundamentals:

· Security: A low Loan-to-Value (LTV) of just 46% against the current value (£600k / £1.3m).

· Exit Strategy: A robust and credible refinance plan based on a significantly increased Gross Development Value (GDV) of £1.85m post-completion.

· Added Value: The planned works would add over £300,000 in value, creating substantial equity.

MT Finance provided a £600,000 bridging loan, secured by a first charge. This facility was specifically structured to:

1. Immediately clear the existing first and second charges, taking control of the asset.

2. Provide a rolling credit facility to fund all building works, conversion costs, and professional fees.

The Result

With finance secured, Always Wright Mortgages Limited efficiently managed the conversion project to completion. The successful transformation into a 6-bed HMO significantly increased the property's rental potential and capital value, achieving the target GDV of £1.85m.

Upon practical completion, they executed their exit strategy, refinancing onto a competitive long-term BTL mortgage based on the new market value. This successfully repaid the MT Finance bridge loan in full, leaving the client with a substantially leveraged, high-yielding investment property and a significant amount of capital released for future projects.