CHL Mortgages will lend on the full property value within the first six months of purchase, where the enhanced value has been gained by improvement works. This can be evidenced by comparing original sales particulars to current valuation and receipts for works carried out. We will also consider enhancements to the title, for instance if the property lease is extended.
This flexibility means that the borrower does not need to wait six months to recoup the costs of improvements and move on to their next project.
Let’s consider this example:
A Landlord bought a property for £250,000 three months ago with a 75% LTV mortgage of £187,500. The Landlord spent £35,000 on improvements – replacement heating system, double glazing, new kitchen, new bathroom, and general redecoration. These works increased the property’s value to £310,000.
CHL Mortgages will lend based on the £310,000 valuation, without the Landlord having to wait until they have owned the property for six months, allowing them to raise a significant amount more capital. Using the same 75% LTV example, the borrower is now able to borrow a maximum of £232,500 – representing additional borrowing of £45,000.
Blended ICR: Get more bang for your clients’ buck