Is your property investment strategy to purchase run down and outdated properties in need of refurbishment, then re-mortgage at the higher value and Loan to Value to pull the money out of the property for your next project?
If so, we have access to the perfect loan product for you.
A leading specialist lender in the Buy to Let and Bridging market has released a hybrid loan product that combines light refurbishment bridging with a standard buy to let mortgage.
What is classed as Light Refurbishment?
Light refurbishment loans are for modernisation projects where the goal is to maximise the value of the property. Works are mainly internal and do not require planning permission or building regulations.
Examples of eligible works:
- Modernisation of a property
- New kitchens, bathrooms, carpets, windows.
- Works needed to meet the minimum EPC rating requirements, such as boiler replacement
- Internal reconfiguration (non-load bearing)
- Properties that are at ‘wind and water tight’ stage that need to be completed
How it works
The lender offers the initial flexibility of bridging finance up to 75% Loan to Value (LTV) of the property’s current value. Once the valuation and underwriting has been carried out, the lender issues an offer for the bridging finance as well as producing an offer for the Buy to Let remortgage up to 80% LTV (subject to affordability) which is valid for 6 months.
As part of the bridge to let incentive, the lender offers a 1.25% discount on their standard bridging facility fee (2% down to 0.75%). The initial steps are:
Step 1 – The Bridge
- Source a property, or use an existing property from your portfolio
- Produce a schedule of works and calculate the after works market and rental value
- Application is submitted via the broker and the valuation is instructed
- Valuer comments on the current value and the post works value based off the provided schedule of works
- The case then gets underwritten and both mortgage offers are issued – Giving you the customer the security and certainty of a guaranteed refinancing exit strategy, as well as locking in the mortgage interest rate
- Solicitors will carry out the legal work and the bridging funds are released on completion
Step 2 – Refurbishment
- Begin the proposed works
- Works must be completed within 6 months
- Contact broker when works are completed
- Broker instructs the reinspection with the same valuer
Step 3 – Buy to Let Remortgage
- Valuer reinspects and confirms that the works shown within the schedule of works have been carried out and states what the increased value is.
- So long as your circumstances have not changed, the buy to let remortgage funds are released and the bridging loan is paid off, allowing you to move on to your next refurbishment project.
With Bridging rates as low as 0.49% per month and Buy to let rates as low as 2.99%, call me today for a free consultation.
Jake Collins – Consultant at Advocate Finance Ltd
Tel: 01206 544333 Professional landlords only. Any property used as security, which may include your home, may be repossessed if you do not keep up repayments on your mortgage .