Exsiting Bank have given me the option to buy back the building and will sell the buildings under the market value. I need to get fast Commercial Finance.
It is not uncommon for lenders to ‘want out’ of current arrangements. It could be that the deal was written when they were lending like confetti and now their paymasters are strapped for funds and would prefer your money back to lend to someone else that fits their current policy better. The reality is since the credit crunch and new European capital adequacy stipulations lenders have had a finite amount to lend and as such our clients have encountered exceptional offers from the lender to release them from their obligations.
This could be in the way of a ‘golden handshake’ with a lump sum, may be waiving early repayment charges, or in some cases the offer to buy back the property or land that the lender repossessed at a significantly lower price simply because as the lender is not geared up to be a landlord and is unable to find a suitor to buy.
For example, it could be you ran a factory in the local area. You fell on hard times – as most did in the recent recession. The lender took back the buildings but without your contacts and know-how it was just a shell and not viable for them to sell it on and therefore they decided to flog it back to you for a fraction of its true worth. This type of bargain comes along maybe once or twice in your lifetime – but even it is being offered to you at £150,000 when its true value is nearer £300,000 that is no good to man or beast if you only have access to £50,000 to purchase it. So that’s where we come in as our lenders are much more entrepreneurial that the high street banks who in recent times have been confined to preparing for the future rather than lending.
Another example, would be if you owned two shops next door to each other in a desirable parade. One was taken back by the bank but you managed to keep the other going. When combined the double fronted shop it is a focal point for the locals and worth tangibly more. Again we could fund against the overall true value.
In short the lending I’m able to access is ‘adult’ by design. Not ‘off the shelf’ and in tick box format but bespoke to the circumstances. It has been dubbed ‘debt forgiveness’ funding due to its nature i.e. lender is better off writing off part of the debt and cutting their losses and re-purchasing party can demonstrate the property / building / business is worth more as in their hands they can complete the package. A win – win.
THE EXSIT STRATEGY
The key point for any lender looking to lend to any business or individual is how will they get their money back and when.
A clear exist strategy needs to be put in place. E.g. buy the property which is worth 300k at 170 from the existing lender and sell it at 285 for a quick sale everyone wins. You or the business would have lost the whole thing so should be happy the new lender will receive their money plus the interest and fees and the old lender has managed to offload risk from their balance sheet. Of course these type of deals are always a last result for any business but nevertheless can give you a viable alterative when things are not going to plan.
For further information on how you can get access to fast Commercial Finance please contact us on 0207 993 2044 or alternatively complete the simple enquiry form on the top right hand side of this page.
Author: Payam Azadi
Payam Azadi is a partner at Niche Advice who are whole of the market Independent Mortgage Brokers. His role is very much focused on Property financing both on residential and commercial lines.