Buy-to-let mortgage arranged within 6 months of property ownership
Our client, a relatively inexperienced property investor, was looking to quickly purchase what she deemed to be a new, bargain investment property. To do this, our client wanted to raise the maximum possible deposit using a recently purchased investment property as security, which had been bought with a bridging loan arranged by ourselves.
The security property was in very poor condition when purchased but had now been swiftly renovated to a standard that was sufficient for mortgage lenders to use as security. We were able to raise all the money required for the new purchase by raising the deposit on the already-owned property via a buy-to-let (BTL) mortgage, and the remainder needed for the new purchase and renovation was arranged as a light refurbishment bridging loan at the same interest rates as a standard bridging loan.
The BTL was allowed even though our client had not yet owned the property for 6 months. We were able to navigate the 6-month rule, i.e., a property needs to be owned for 6 months before refinancing at a higher value, because we were able to evidence the work carried out by our client and value added during the period of ownership, and the bridging lender also supplied BTL products that were specifically designed for this type of transaction.
Our client intended to renovate the new investment property, which was uninhabitable and not suitable for mortgage purposes, and sell it for a profit once it was complete to repay the bridging loan.