How much deposit do you need for a bridging loan on a Buy to Let ?

Generically speaking, let’s say 25% plus a bit – because it depends what we’re going to do with it. If it’s a refurb project, a lender will usually lend 75% of the property value. They’ll also give you more for the refurb work if you need it, as well.

There are some other options if you’re buying a property below market value. Sometimes you can use the market value for the Loan to Value and put in a smaller deposit. It doesn’t always work.

Just because a property is run down, it doesn’t mean you’re getting it for below market value. It’s just going to be worth more when you’ve done the work. Sometimes people confuse below market value with ‘cheap’.

So let’s aim for 25%, but it could be less. If you’ve got other property that we can use as security, that can be an option. I’ve got 100% deals for people using another property as security. Perhaps you’ve got another Buy to Let property with some equity that we can use as security for the new loan, or to borrow a little bit more. There are lots of ways of doing it.

How much can you borrow on a Bridge to Let mortgage?

It’s not about your income or the rental income. It’s about the property value – or combined values if there’s more than one. It’s about the property, the exit and the plan and there’s no maximum loan. We’ve helped people borrow from £60,000 up to £5 million.

What are the fees for Bridge to Let?

It’s standard bridging fees. If this is your first bridge, and you’re coming from a residential mortgage only, you’re going to be surprised by the fees. But if you’ve done it once or twice, you’ll know that’s just how it is.

You’re generally going to have a 2% arrangement fee of whatever you’re borrowing. Some heavy refurbishment bridging loans might have an exit fee as well. Not many, but some might have a 1% exit fee.

You’re going to pay your legal fees and the lender’s legal fees, which will cost a couple of thousand pounds, and then you’re going to pay a valuation fee of a few hundred up to a couple of thousand pounds. It depends on the property, and whether it’s commercial or residential.

Can you still get a Bridge to Let loan with bad credit?

Yes, you can, because the bridging loan is much less reliant on you and your income. You’re not repaying the bridging loan each month. The interest is going to roll up or be retained from the start. Lenders factor in the interest and you pay it at the end, rather than each month.

As a side note, your exit strategy is probably going to be more affected by adverse credit in the past. We need to make sure we can get the refinance, if that’s the exit. The bridge won’t be much of an issue, but we need to confirm your exit strategy before we go into the bridge.

How does remortgaging work in this case?

Once you’ve done the bridge and the refurb work, we’re going to look at remortgaging it.
That works in just the same way as any other mortgage. We just go to a normal lender on a normal rate, depending on the property or HMO.

Just like paying off a mortgage with another mortgage lender, we’re just paying off a bridge instead. We just need to allow plenty to pay off the bridge. In these cases we’re usually releasing some money, as well.

You’ve bought the property cheap, spent money on it and now it’s worth quite a lot more. We refinance, pay the bridge back and potentially get you some extra money for the next project – that’s the general idea.

What are the pros and cons of using a bridging loan to get a Buy to Let?

It’s probably not so much about pros and cons – it’s whether you need it or not. It’s often the only way to buy certain properties to rent out. If you’re buying at auction a property with no roof, you’re not going to get a normal Buy to Let mortgage on it.

One of the disadvantages is the cost, as a bridge is a lot more than a normal Buy to Let mortgage, but it’s something you only do if you need to.

The big pro is that it will enable you to do what you want to do. If you’re not happy with the costs, then buy a property that you can rent out straight away.

How do I apply for bridging to purchase a Buy to Let?

You just need to get in touch to give us your details and what you want to do. If you haven’t found anything to buy yet, that’s actually better – it gives us time to get things lined up.

Bridging loans can be done quite quickly. Some people think it just takes two or three days, but the quickest lenders usually come back in a week or so, with a fair wind and everything going in the right direction. Generally, we allow a few weeks.

The quicker you need it, the more expensive it will be. Lenders that turn around deals in no time at all will charge for the privilege. The more notice you can give, the better.

Speak to us and we’ll go through who you are and what you want, and then we’ll put a solution together for you. If you want to know any more, get in touch.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.

SOME BRIDGING FINANCE IS NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.