Lumi Bridging Solutions?
Using a Bridge to Let Loan
Are you a property developer or Investor?
Obtaining a bridging loan can be the most decisive factor in being able to secure funds quickly to secure a property transaction. Understanding what options are available to you can therefore allow you to either, a) capitalise as and when opportunities arise, or b) maximise your profit potential on projects.
Explain Bridge to Let
To put it simply this is a loan product designed for landlords who wish to keep their properties to build a portfolio to rent to tenants rather than purchasing property to flip. These types of loans come with a pre- approved buy to let mortgage meaning they are more flexible than standard mortgage products that may not allow property investors to secure the right type of deal.
How does it work?
A portion of the loan can be used to either purchase or refurbish a property. In some cases you can do both. Once the property is deemed satisfactory to be let to a tenant, the loan is transferred to a buy to let mortgage. The main benefit to you here is you have a faster turnaround for loan approval and have a pre-defined exit strategy to your bridging loan which takes away some of the stresses of securing finance on completion of renovation property works. This type of financing can be secured within days rather than weeks or months depending if all the details of the property case stack up.
To secure any type of bridging loan any applicant would need to be able to display to a lender their ability on how they intend repay the full loan amount. Examples of this would be selling the property to realise capital or simply converting a bridge loan to a buy to let mortgage to aid long term cash flow. A bridge to let finance product factors in the exit strategy immediately, this means at the point you the landlord start letting your property and need to switch to more attractive rates on a longer term deal, you are able to do so with the same lender. This saves time and hassle as you are not required to fill out multiple applications to secure finance.
You will need to compile the basic information most lenders require to gain any loan approval. For an individual or Company these tend to be the following:
Your business case for the property and exit strategy, this will include a detailed list of all works required to be done to the property and the main contractors that will be used to complete this.
Your background and property experience
Proof of funds (deposit) and any additional security available to secure funding if required.
Rates are based on the applicant and the project and they will always vary from lender to lender. In most cases those with a clean credit history and a strong track record of property development or refurbishment can potentially expect to obtain attractive rates.
If the numbers for the project stack up and it is deemed viable there maybe lenders willing to consider taking up the option to facilitate a loan with someone who has an adverse credit history. However, due to the applicant’s profile expect to pay a higher rate of interest for the privilege of a loan to offset the risk to the lender.
Yes. Most lenders will use a metric based on the Loan to Value (LTV) of the property. For a bridging loan the maximum a lender may be willing to stretch is 80% LTV. In a nutshell this means that they would be willing to lend you up to 80% of the value the property is worth, for example if you have a house valued at £250,000 with an LTV of 80% this means a lender would be prepared to lend you a maximum of £200,000 with them taking a charge as security against the property. However the industry average LTV for buy to lets is around 75%, bear in mind in some cases the higher the LTV the higher the rates will be in order to pay back the loan. Things that can influence a lenders’ decision on a LTV is a valuation report and the term of the loan. If the state of property is deemed uninhabitable and if there is a huge disparity into what you think it is worth on completion of works the end is result is likely to be the lender offering a lower loan amount due to their perceived risk exposure.
The percentages quoted above are gross loan percentages i.e. before interest and fees are deducted.
As interest rates and fees vary from lender to lender but before you enter any deal it is wise to try and obtain an illustration of what a potential deal may look like if you were to proceed with a loan application. In some cases it may be more prudent to use a broker who has access to the whole of market to find you the best possible deal. These are list of fees or considerations to factor in:
Product Fee – Usually payable on application
Valuation Fee – Usually payable on application
Funds Transfer Fee – Usually deducted from the advance
Loan Exit Fee – Usually 1% of the loan amount
Solicitors & Conveyancing Fees
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Helping you choose the right buy to let bridging loan for your investment property
Commercial Bridging Finance
Looking to buy a commercial property or need funds for another business purpose?
Buy to Let Bridging
Buying at auction or a property for refurbishment?
A bridge can give you funds fast to complete that quick purchase.
Bridging Finance to break that chain
Need a bridge until you can sell your current home, or simply release funds for another project.
Borrow from £25,000 to £15,000,000
No matter how much you want to borrow, we will do our best to make it happen, without the fuss or headache.
Rates from as little as 0.37% per month
Lender’s rates change regularly, so we always scan the market to get the best rate for your specific circumstances.
Make use of our in-house accountants
Their expertise and experience are part of our service and at your disposal.
Find the right bridging finance at Lumi Bridging Solutions
Contact us today for your bridging finance, buy to let mortgage, commercial mortgage, bridging loan for house purchase, HMO purchase, emergency cashflow loans, auction finance, bridging loans for property development, bridging loan mortgage, business bridging loan, commercial development financing.
Bridging finance for your commercial or residential property
LUMI BRIDGING SOLUTIONS IS A TRADING NAME OF FEINGOLD FINANCIAL SERVICES LIMITED
Company registration number 05087823. FCA registration number 303451. Data protection registration number Z8766562
Registered office: 1st Floor, Swan Buildings, 20 Swan Street, Manchester, M4 5JW.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE SECURED AGAINST IT.