Partner Article

Surrey property developer acquires HMO with help from challenger bank Shawbrook

A Surrey property investor, Susan Seery, has purchased her first semi-commercial property at auction after successfully obtaining a loan from the Essex-based challenger bank Shawbrook.

The property in question is a large House of Multiple Occupation (HMO) with two retail units on the ground floor.

As Susan has significant experience with HMO properties and within the buy-to-let market, her broker, Tony Read of Lion Finance, approached Shawbrook with the commercial mortgage application.

The income from the HMO alone provided sufficient cover for the bank’s stress testing, without the need of the rent from the two shops.

Stress testing is carried out by banks to ensure the borrower can afford to repay the loan if interest rates rise.

This, coupled with the investor’s previous experience, gave the lender the assurance that the client would be able to generate the necessary income to service the debt.

In addition, one of the shops has been rented to a tenant for over 15 years, giving the business a strong tie to the premises, and again giving the lender confidence that they would remain.

The client also has a good income level outside of these properties and a great credit history across a number of mortgages. Taking all these factors into account enabled Shawbrook to become comfortable with the mortgage application.

As Susan was purchasing the property at auction, she had already paid a deposit, giving the lender a tight deadline. This was regardless of the fact the application was for a standard mortgage loan rather than a short-term loan when speed is essential.

After Shawbrook made an Indicative Mortgage Offer within 24 hours of receiving the application, the valuers highlighted a small issue which needed a structural report to investigate.

However, once this was supplied, it revealed that the work needed could be done after completion as it was not of a structural nature.

This allowed the lender to make this a condition of the mortgage offer and the case then proceeded swiftly to completion, within six days of the Formal Mortgage Offer being issued.

Susan obtained a loan of 71 percent of the property’s value on a three-year, interest-only basis. She commented that she was “delighted at the great service and fast turnaround that Shawbrook provides for the professional investor”.

The broker, Tony Read of Surrey-based Lion Finance, said: “This has to be one of the fastest completions that I have experienced in all of my years in the broking business”

Karen Bennett, Sales & Marketing Director, Commercial Mortgages, Shawbrook

This was posted in Bdaily's Members' News section by Karen Bennett .