Mortgage For Place of Worship: Our Work

We recently helped the Committee if a temple in the UK access a Loan of £1,000,000 at Interest Rate of just 3.25%. Keep reading to find out how!

What was the problem?

The committee of a temple in the UK, structured as part of a charity, recently contacted Knights Row to source funding for a development project. The committee had been doing great work in the community and wanted to continue supporting it for years to come.

The charity owned a piece of freehold land in the same city as the temple and wanted to use it in a sustainable way. The committee decided to develop a block of flats on the land, with a long-term vision of owning the flats outright and using the additional income to support local causes. This project would also offer high-quality accommodation to ease a housing shortage in the area.

The land was owned outright, and the development cost was estimated to be £1.5 million. The charity required £1 million in cash to complete the build. Overall, this development project would not only benefit the community but also provide a sustainable source of income for the charity to continue their valuable work.

Our solution

Normally, we would seek a development loan from the market for a project like the one outlined above. However, since the charity lacked experience in property development (as it fell outside their usual core activities) and there was a risk of reputational damage for the lender if something went wrong, this approach was deemed inappropriate.

After discussions, it was discovered that the charity owned their main temple building outright, which was worth significantly more than the funding requirement, and had sufficient cash flow to cover the mortgage costs. It was therefore agreed that a mortgage against the temple would be the preferred option, providing the required amount for the development upfront and resulting in both the temple and the freehold block of flats being owned outright at the end of the term.

Despite this approach, securing finance proved to be a challenge, as many lenders were hesitant to lend against a place of worship due to the reputational risks involved in the unlikely event of a default. Furthermore, the charity's main source of income was from cash donations that could not be traced for anti-money laundering purposes, which added to the difficulty in securing financing.

What was the outcome?

Thanks to our extensive network within the market, we were able to identify a lender who shared the charity's values and recognised the important work carried out by the temple. The lender presented the following favourable terms to enable the charity to proceed with the development project:

• Loan Amount: £1,000,000

• Interest Rate: 3.25% per annum above the Bank of England Base Rate (at the time of writing, the BoE Base Rate is 4%)

• Duration: 20 years, with repayment of both capital and interest

• Lender Arrangement Fee: £15,000 (1.5% of the loan amount)

These terms reflect the lender's belief in the charity's mission and demonstrate their commitment to supporting valuable community initiatives.

What should I do if I am looking for a mortgage?

Please get in touch with Knights Row if you would like to source a mortgage against a place of worship today.

Email matt@knightsrow.co.uk or call 0333 339 5905