Client is currently buying a property that comes with a plot of land that he would like finance to build a house on. He is applying for planning permission and the likely end value will be £750,000 of which he will then need £450,000 in order to build the new property and renovate the other property that forms part of the purchase.
Client earns circa £90,000 but the £450,000 loan plus his mortgage on the new purchase amounts to more than 7 times income. There were a number of lenders who would consider the case, even though there is the obvious affordability issue with serviceability of this loan whilst also agreeing to lend on land without planning.
Most of the lenders would only lend circa 50% of land (currently £150,000 then 100% of build cost up to a maximum of 55% of the GDV = a max lend of £337,500.
Through our relationship John Charcol managed to get one of the lenders to agree to lend the full £750,000 but due to the affordability stretch would only lend on a rolled up interest product at 10.45%. However the deal enabled the client to proceed with the purchase.