The Castle

A 'warts & all' account of the transformation of a run-down pub in Bradford-On-Avon into a 'proper' Inn (food pub with rooms). Written by Alex Reilley & Pierre Woodford

Wednesday, November 08, 2006

It's great...but not great

There's the small matter of money to consider

We decide it's time to speak to the bank. A brief conversation follows with us explaining our great plan & how we enjoy working with NatWest etc, etc, we then cut to the chase. "How much can we borrow as a commercial mortage?", & "What happens if the valuation if short?"

Now as you all know when you buy a house you can borrow all of the property's value & in some cases even more. With a commercial property it's different & with pubs (high risk loans apparently) you'd be lucky to borrow more than 70% of the freeholds value. Therefore on the basis of the Castle being valued at £480k (& that's by no means a certainty) & us being able to borrow 70% as a mortgage that would leave us needing to put down £144k as a deposit (you may recall an earlier entry when I stated we had £140k in the pot). So we could find an extra few grand buy the place & then have no money to do it up with! Not an option.

On the positive side the bank are willing to lend against the development & subsequent rise in freehold. The bank agree to put the valuation out to tender & take it from there. It seems unfiar that such good news only serves to create more problems.


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