Bridging Refurbishment Finance
Bridging refurbishment finance is a buy to let product that is designed to help landlords maximise rental yields by refurbishing the target property before they rent it out. The product brings together the flexibility of bridging finance with an exit onto a long-term buy to let mortgage once the work has been completed. Not only does this give landlords the peace of mind that they have an exit, they can also rest assured that the price of the buy to let loan at offer will be the price they get on completion
If your property investment strategy to purchase run down outdated properties in need of refurbishment, then re-mortgage at the higher value and Loan to Value to pull the money out of the property for your next project? We have access to the perfect bridging refurbishment loan products for you. As a leading specialist in the Buy to Let and bridging refurb finance market we can access bridge to let loan products that combines light refurbishment bridging with a standard buy to let mortgage.
What is classed as Light Refurbishment in Bridging Refurbishment Finance?
Light refurbishment loans are for modernization projects where the goal is to maximize the value of the property. Works are mainly internal and do not require planning permission or building regulations.
Examples of eligible works:
- Modernization 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 does bridge to let refurbishment work?
The bridge to let lender offer the initial flexibility of bridging finance of between 75% to 80% Loan to Value (LTV) of the property’s current value. Once the valuation and underwriting has been carried out, the lender issues an initial lending offer for the bridging finance as well as producing a mortgage offer for the Buy to Let remortgage up to 80% LTV (subject to affordability) which is valid for 3 to 6 months.
Step 1 – The Bridge Finance Product Steps
- 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 – Bridging Finance Refurbishment
- Begin the proposed works
- Works must be completed within 6 months
- Contact broker when works are completed
- Broker instructs the re-inspection 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 at the moment and Buy to let rates as low as 2.99%, get in touch for a free chat.
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