Loan Case Study 3:

Location: Cardiff

LTV: 80% 

LTGDV: 63%

Rate: 1% per month

Term: 12 months

Loan Purpose: HMO Conversion

Exit: Refinance onto Commercial Mortgage

The Opportunity

Severn Capital was approached by a developer seeking funding to convert a former townhouse in Cardiff, currently arranged as two self-contained flats (C3 use), into an 8-bedroom HMO (Sui Generis use). The property was well located for the HMO market, and the borrower had secured planning consent for the change of use and internal reconfiguration.

Our Solution

We provided an 80% Loan-to-Value facility on the day-one purchase, with the overall facility representing 63% of the Gross Development Value. The facility was structured over a 12-month term at a fixed rate of 1% per month, giving the borrower time to complete the conversion works and stabilise the income prior to refinancing.

Exit Strategy

The borrower’s planned exit was via a commercial mortgage upon completion and letting of the HMO. The strength of the planning, clear rental demand, and experience of the developer gave us comfort that the exit was viable within the term.

The Outcome

Our flexible approach allowed the borrower to move quickly on the purchase and begin the conversion works without delay. This case highlights Severn Capital’s ability to support well-structured HMO conversion projects with fast, common-sense bridging finance.