🌟 Case Study: How Hammered helped Charlotte clear £860k debt at auction

April 15, 2023

Charlotte Mills faced a challenging investment situation when she purchased two houses which were illegally divided into six flats in Manor Gate, Northolt (UB5). Her initial plan was to obtain a certificate of lawful use, refurbish the properties, split the titles, and refinance to pull all the money out. She financed the purchase with a 110% bridging loan, secured by a second charge on a valuable Central London property.

However, the project encountered several setbacks. Delays in refurbishment, the need to replace the builder, and escalating costs were compounded by Charlotte’s personal circumstances. Consequently, she enlisted the help of a trusted friend to manage the project. With just three months before the bridging loan’s expiry, the cost was set to double from £11k to £22k per month. That’s when we stepped in to provide assistance.

Using our four-step process, we identified that the priority was to clear the debt quickly and effectively, rather than maximising the property’s sale price. Given the escalating costs, waiting for a better price would only be negated by the mounting bridging costs. We advised Charlotte to opt for an auction to avoid the costs of property repossession. Although this was a stressful decision, she knew that not repaying the bridging loan could put her Central London property at risk of being repossessed. The new project manager, who was often traveling for work, needed someone capable of handling the situation.

The most crucial aspect of the transaction was the sale progression, which involved obtaining all the required information for the legal packs, ensuring the property was positioned correctly, and dealing with the bridging company to guarantee their cooperation in releasing charges over the property. Charlotte was confident that we could manage this process for her.

Ultimately, we decided to go with the suggested auction, and both properties were sold. We were able to clear 98% of the accumulated debt, and the lender released charges over the properties. Although Charlotte was disappointed with the initial project’s failure, the sale allowed her to move forward without the burden of repossession and losing her most valuable assets. This gave her peace of mind and the opportunity to focus on her personal life.

Key Stats:

Purchase price: £700,000

Initial Debt: £770,000 rising at the rate of £22k per month, ending up at £860,000 at the sale’s completion.

Sale Price: £850,000

The Hammered Way: Rising debt cleared, with the outstanding £10,000 balance cleared by the lender through negotiation. Our client’s Central London house, used as secondary security, was rescued.

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