How Bridging Finance is Helping Landlords Leverage Golden Opportunities

Take a look at today’s BTL property market and you find yourself faced with a double-edge sword. On one hand, you have average monthly rents that keep on skyrocketing to record highs, month after month. On the other, you have the kinds of eye-watering average property prices that are pricing millions out of the market entirely.

Up and down the UK, buy-to-let landlords with inventory in desirable regions are pocketing enormous profits. All well and good, but buying into these regions in the first place is becoming increasingly difficult, as average house prices continue to break records.

Buy, Renovate and Let Out

One option to overcome this hurdle is to purchase properties in need of renovations and refurbishments. It has been the norm for decades for landlords to set their sights on homes in a questionable state of repair, in order to perform the essential improvements needed to let them out to tenants.

Unfortunately, major banks and building societies are increasingly distancing themselves from these kinds of property purchases. Even where specialist buy-to-let mortgages are available on the High Street, it is practically impossible to find a major bank that’s willing to lend against a rundown or derelict home.

Even if the applicant indicates their clear intent to bring the property up to scratch, they are unlikely to qualify for funding.

This is particularly unfortunate in today’s climate, where demand for affordable housing continues to outstrip supply by a clear margin. Recent estimates suggest that there are at least 200,000 homes in the UK that have stood unoccupied for six months or more - the vast majority of which are undoubtedly in a poor state of repair.

Landlords want to expand their portfolios and tenants are crying out for affordable homes, but major banks and lenders are still showing little to no flexibility.

Bridging Finance for BTL Investments

This is where bridging finance can offer a welcome lifeline to new and established BTL investors. Bridging loans differ from conventional loans and mortgages, in that they can be issued against any type of property in any state of repair.

A strictly short-term facility, bridging finance can be particularly useful for taking advantage of time-critical investment opportunities. With all the required paperwork in place, a bridging loan can be arranged and accessed within a few working days.

This effectively gives an investor the spending power of a cash buyer, enabling them to make snap decisions on property purchase opportunities. Auction property purchases in particular call for prompt action, where the full balance needs to be paid within 28 days.

Bridging loans - typically charged at a rate of around 0.5% per month or less - can be used to both purchase properties in any state of repair and cover the costs of the subsequent renovations. After which, the property can be let out for the best possible price, and the loan can be either repaid in full or transferred to a longer-term repayment facility (like a conventional BTL mortgage).

All of which is helping landlords across the UK leverage golden opportunities, and get more unused properties back onto the market where they belong.

Craig Upton supports UK businesses by increasing sales growth using various marketing solutions online. Creating strategic partnerships and keen focus to detail, Craig equips websites with the right tools to rank in organic search. Craig is also the CEO of iCONQUER, a UK based SEO Firm and has been working in the digital marketing arena for many years. A trusted SEO consultant and trainer, Craig has worked with British brands such as FT.com, djkit.com, UK Property Finance, Serimax and has also supported UK doctors, solicitors and property developers to gain more exposure online. Craig has gained a wealth of knowledge using Google and is committed to creating new opportunities and partnerships.