PBL068 Newmarket DEFAULT (Partial Recovery)

apparently not

You are right, but do you know how much is being repaid, and how much is left over for "improvements" to the house?  I do.  Now if everyone asked this question of SS they might get fed up with answering it and actually put it on the website.

How much?

For reference, the borrower will be left with sufficient funds after our costs, PLUS THEIR OWN FUNDS to complete the refurb to a sufficient standard as detailed in the Loan Parts. 

We are also lending on the valuation as of today, not taking into consideration the uplift in value for the refurb. This is a bridging loan and he can do what he wants with the funds to a degree. We would prefer him to spend the surplus plus his own funds on the refurb but we are content to lend 70% against todays valuation. 

But will that value hold up in 12 months time if the property market has been impacted by higher interest rates for instance (Believed to be imminent in the US and Britain likely to follow suit.) Therefore the potential for the significant refurbishment to be undertaken is relevant to lenders when assessing whether the stated exit plan is viable? There are a number of lenders on the forums involved with bridging loans where the intended refurbishment was not carried out as planned due to lack of funds, the loan defaulted and the valuation proved to be optimistic and recovery is ongoing and is unlikely to result in a full recovery of all sums owed.

I guess the point is that there is no obligation on the borrower to undertake the renovations. Hence the only "firm" security is the valuation in its current state. However the knowledge that there are funds available to support the "intended" renovation goes some way to providing confidence in the exit plan.