So, what is a bridge-to-let loan?
The bridge to let loan product is a combination of a bridge loan with a secured (BTL) buy to let mortgage from the same lender. This is an attractive product, for those property investors that like to buy auction properties and move them into their rental property portfolio. I’m sure many of you are aware of the TV show Homes Under the Hammer. Most properties featured on the show, are bought at auction using a bridging loan. Then the purchasers can refurb and flip. Or look to keep the property for its rental yield.
A bridge to let product is only offered by a lender that can provide both the bridge loan and buy to let mortgage. For example, Precise Mortgages can do this, as they have both services within their business.
When would you use it?
If you can’t initially afford the purchase of a property (Cash buyer), the property is unmortgageable or you need to move fast. It can be used when buying any residential property as long as you intend to rent in the future. It’s designed for property investors who are looking to grow their rental portfolio quickly. One thing to remember, the LTV for each product might be different. For example, you might only be able to borrow 65% LTV with the Bridge loan, while the LTV is 75% with the BTL mortgage.
What are the advantages of the Bridge-to-let loan?
The bridge loan is fast and allows investors to move quickly on a property purchase. Great, if you are looking to buy at an auction property. Getting a bridge to let loan means the exit strategy is pre-approved with a buy to let mortgage lender. Also, the admin fees can be lower if you are using the one lender. Since its one product, it could mean you won’t be charged double compared to if you wanted to use two different lenders.
What is the process?
Given that Bridge to Let products are typically secured on the property the borrower is looking to purchase, the application process can be comparatively quick and easy. Just as long as you have the required collateral to secure the loan. If you do not have a particularly strong credit score or current proof of income, your application may still be considered on its own individual merit. As mentioned before, bridge to let is more secure as the exit strategy.