beautiful-couple-on-a-boat-at-sunset-header-breaking-the-cycle-of-high-interest-development-loans

Breaking the cycle of high-interest development loans

Our client’s wishes

A Jersey-based couple came to us through their trusted local broker with a common problem. As property developers, they’d successfully built two premium properties but were now stuck paying nearly 10% interest on their private construction loans. To help clear this expensive debt they were looking for a buy-to-let mortgage on one of their newly-built properties.

mount orgueil castle overlooking grouville bay in small town Gorey Jersey
Our clients' situation

The couple had successfully built multiple homes, but their financing was eating into their income. Like many developers, their business showed the typical ups and downs of property development – and they were in a ‘down’ phase between projects when they approached us.

On paper, their company wasn’t showing profit at that time, which for many banks would have meant an immediate ‘no’. The property they wanted to mortgage was set to bring in £4,000 in monthly rent, but even this amount wasn’t quite enough to meet standard lending criteria of many banks. This is where we were able to help.

We offered a mortgage of £828,750 on a 2-year variable rate at just 1.25% above the Bank of England Base Rate - a significant improvement on their existing financing.

Our clients' outcome

Rather than focusing solely on rigid lending criteria, we took a more practical approach. We offered a mortgage of £828,750 on a 2-year variable rate at just 1.25% above the Bank of England Base Rate – a significant improvement on their existing financing.

To make this work, we:

  • assessed their complete financial position, not just the rental numbers
  • factored in their broader property portfolio and other income sources
  • required 12 months of interest as security initially, with a built-in reduction to 6 months, once rental payments were established.

The outcome was exactly what our clients had hoped for. Their application was approved promptly, the valuation completed without delay, and they secured a tenant at the full £4,000 monthly rental they had projected.

Most importantly, they cleared their expensive development loans and substantially improved their cash flow position. Our clients were delighted with both the efficiency of the process and our willingness to understand the realities of property development. We looked beyond the temporary financial snapshot to understand the real dynamics of their business to find a practical solution that worked for them.

Related news

You may also be interested in the following Insights

Contact

Get in touch with a member of our team to find out how Nedbank Private Wealth can help you achieve your financial goals and objectives.

Email our credit specialists directly at [email protected] or call +44 (0)1624 645000 to speak to our client services team.

Any examples of investments and structures used are for illustrative purposes only. This case study does not constitute an invitation or inducement to buy any financial investment or service. None of the content constitutes advice or a personal recommendation. Individuals should seek professional advice, based on their jurisdiction and personal circumstances, before making any financial decision.

Discover how we can help
Image showing a father and son on a bike
Related case studies

Read about more clients we have helped

We have helped countless high-net-worth clients with their financial needs – some straightforward, some complex. Our bespoke approach, where we really get to know our clients, allows us to offer solutions that other wealth planners and private banks aren’t able to.

View all