Bridge to Let

For the most part, Bridge to Let products are identical to standard bridging loans. The only difference being that in the case of a Bridge to Let mortgage, the service is exclusively open to the Bridge to Let market. The idea being that Bridge to Let products provide existing or new landlords with the opportunity to purchase a property they intend to let out, though don’t currently have the financial means to complete the transaction.

The vast majority of Bridge to Let mortgages can be used to purchase residential and commercial properties alike, the loan typically being repaid when the landlord moves over to a traditional mortgage and lets the property out. Such loans are offered on the condition that the borrower is able to achieve 100% rental coverage, meaning that their rental income should be able to cover their repayment obligations as an absolute minimum.

When Would you use a Bridge to Let loan?

Just as is the case with bridging loans, Bridge to Let products are designed to be significantly more accessible when timeliness is of importance. For example, if you are interested in purchasing a Bridge to Let and come across an outstanding opportunity that will only be available for a short period of time, conventional loans and mortgage products are of little use. Often taking weeks or even months to complete, a traditional mortgage isn’t suitable where time is at a premium.

By contrast, Bridge to Let mortgage products from independent lenders can be paid out considerably faster. Much quicker than it would take to arrange a traditional mortgage or even pay an initial deposit, these are the kinds of flexible financial solutions that respond to the needs of today’s Bridge to Let business owners.

They can also be highly useful for those looking to purchase properties at auction and need to come up with the required payment as quickly as possible.

Qualification and Security

Given that Bridge to Let products are typically secured on the assets of the borrower, the application process can be comparatively quick and easy. Just as long as you have the required collateral to secure the loan, you are almost guaranteed to qualify. Even if you do not have a particularly strong credit score or current proof of income, your application will still be considered on its own individual merit.

Completion of a Bridge to Let mortgage typically takes between three days and three weeks, with the minimum loan value in the region of £30,000. Exactly what kinds of assets are considered acceptable varies from one lender to the next, but will usually include the following examples:

• Residential property
• Commercial property
• Multiple occupation properties
• First and second charge security

As a fully independent broker, we can provide you with comprehensive access to the very best deals on the UK market from the country’s most dynamic lenders. Whatever your priorities and current financial position, we can help you explore a variety of Bridge to Let products.

Buy, Refurbish, Rent, Refinance (BRRR)

Buy, Refurbish, Rent, Refinance (BRRR) is a property investment strategy popular in the UK that enables investors to acquire properties, increase their value, generate rental income, and then release equity to fund further investments. It’s often viewed as an effective way to build a property portfolio with a relatively small initial capital outlay. Here’s how it works:

1. Buy:

• Purchase a Property: The first step is to buy a property, typically one that’s undervalued or in need of modernisation. Investors often target distressed properties or those sold at auction, where a lower purchase price can be negotiated.

2. Refurbish:

• Improve the Property: After purchasing, the investor renovates the property to enhance its value. Refurbishments can range from minor cosmetic updates to major structural repairs, depending on what’s needed to make the property more attractive and rentable.

3. Rent:

• Let the Property: Once the property is refurbished, it’s rented out to tenants. The aim is to generate a steady rental income, ideally covering mortgage payments, maintenance costs, and other expenses, while also providing positive cash flow.

4. Refinance:

• Release Equity: After the property is tenanted and its value has increased due to the refurbishment, the investor can remortgage the property. During refinancing, the property is revalued, and the investor may be able to borrow against the increased equity. The released funds can then be used to pay off the original mortgage or to invest in another property, effectively recycling the initial investment capital.

Why Use the BRRR Strategy?

• Leverage: This approach allows investors to leverage the equity gained from one property to fund further purchases without needing substantial additional capital.
• Cash Flow: Renting the property generates income while allowing the investor to retain the asset and benefit from any future capital appreciation.
• Portfolio Growth: Refinancing enables continuous growth of a property portfolio, as the investor can keep acquiring more properties using the same initial capital.

Risks:

• Market Conditions: Fluctuations in the property market can impact property values and rental demand.
• Renovation Costs: Unexpected costs during refurbishment can reduce profit margins.
• Interest Rates: Rising interest rates could make remortgaging less attractive or reduce the amount of equity that can be released.

For more information on any of our services or to discuss Bridge to Let in more detail, get in touch with a member of our customer support team today.