Buy To Let Bridging Loans

Funding a business venture or renovating property for investors is often considered exciting, but for high street lenders it is often deemed as too risky a proposition to back. At Bridging Options, we support the buy to let market by offering an alternative way to purchase property and bring it up to a mortgageable state, thanks to our short term buy to let bridging loans.

Buy to let bridging loans are designed for the buy to let market, to allow investors to purchase property quickly until their next form of finance is agreed or capital becomes available through the selling of existing assets.

The buy to let market is a competitive one, and the ability to move quickly if often key to securing the right property. This can sometimes mean moving before you have a mortgage or deposit in place and this is when our bridge to let loans are most useful.

What is a buy to let bridge loan?

In order to make the most out of an investment property, developers will look for places that need significant refurbishment work, houses that are only available at auction or property that can be purchased quickly.

The issue with this is that most mortgage lenders will view these properties as inhabitable and will therefore not be prepared to give you the finance needed or will require a lot of time in order to complete the necessary checks and paperwork. Time you often don’t have.

At Bridging Options our buy to let bridge loans can provide you with the finance to purchase either residential or commercial properties providing you have a specified exit strategy in place in order to repay the loan.

This could be in the way of a conventional buy to let mortgage once the work is complete, or from letting out the property either in part or in full if the income is equal to your payments.

Are buy to let properties still worth the investment?

There was a time when becoming a landlord seemed like the quickest route to living the high life. Mortgage rates were at an all-time low, rents were high and property values were on the up. However, recent tax changes and an increase in stamp duty in the last few years have made it trickier to turn a profit on a buy to let property.

Tricky yes, but not entirely impossible. Buy to let landlords can still make a good profit as long as they choose to invest in the right locations and are clever with their finances.

Buy to let properties offer investors two income streams – passive rent and investment growth. And, with the population expected to reach around 74 million within the next 20 years, the demand for housing will only become more urgent.

So, if you want to get ahead of the game and get on the buy to let ladder, contact our specialist bridging loan experts for further information and advice.

What are the benefits of using a buy to let bridge loan?

A buy to let bridge loan gives you the ability to secure property quickly, when it may otherwise have not been possible. And, the great thing about a buy to let bridge loan is that it can generally be agreed within a few days or weeks, in comparison to a mortgage that can take months to arrange.

A buy to let bridging loan gives you the flexibility to:

  • Secure pre-approval of exit finance. If a buy to let mortgage is currently unavailable due to the state of the property, then a buy to let bridge loan can provide you with the upfront funds until permanent funding can be agreed.
  • Purchase properties at auction. Although only a small deposit is required when the hammer hits at auction, you will be expected to pay the full purchase price within a 28 day period. This generally, does not leave enough time to apply for traditional forms of finance, so a buy to let bridge loan is a great short term alternative.
  • Prevent the chain from breaking. A lot of buy to let investors will raise the funds to purchase new properties by selling previous ones at a profit. But this often mean that developers run the risk of missing out, whilst waiting for sales to complete. A buy to let loan, bridges the financial gap so that investors can complete on a purchase even if their existing home is still on the market.

Exit strategies for buy to let bridge loans

When you take out a bridging loan, you have to specify an exit strategy. Our buy to let bridging loans are secured based on a short term payment agreement with the exit strategy normally relying on refinance being achieved through a buy to let mortgage deal.
At Bridging Options, we can organise your buy to let bridge loan and can help and advise you on the best ways to refinance for the long term.

How much can I borrow?

At Bridging Options, we evaluate each application on a case by case basis but do have criteria for establishing how much an investor can borrow on the bridge element of the buy to let finance. This includes:

  • LTV Rate – We will look at your loan to value rate, depending on how much deposit you can put up, and how much the property is worth.
  • Property type – We will also consider the state of the property before and after any potential refurbishments.
  • Loan period – We will look at the time period over which you expect to take the buy to let bridge loan.
  • Exit strategy – We will want to see a clear repayment plan.

Most buy to let bridging finance is arranged so that there are no monthly payments, with the interest added into the overall cost of the loan. The bridge loan is then repaid in full at a specific point in time.
If, however, terms have been agreed and the interest is to be paid monthly, then evidence for how this will be afforded will need to be demonstrated e.g./ rental income.

Why choose Bridging Options

Even with the changes to the current legislations, a buy to let property can be a useful way to save for a happy future. And whilst property shouldn’t be seen as a quick investment, sometimes a quick purchase using a buy to let bridge loan is necessary in order to seal the best deal.

At Bridging Options, we have expert brokers who can scour the market to find the right buy to let bridge loan rates for you. So, for specialist advice from a bridging loan broker who understands the buy to let market, please get in touch with us today.

Need specialist advice?

Complete the form to arrange your initial free phone consultation with a bridging loan adviser: