404 Not Found

nginx
4th August 2026 | Baya financial

Month: July 2022

Precise have expanded their bridge to term product!

by

How does it work?

  • You have one valuation carried out to give you a today figure and a GDV. 
  • You receive two mortgage offers – for the bridge and the term.
  • You have the offer for the term before you start.

For the bridge:

You can borrow 75% LTV to purchase the property

They allow a light refurbishment, including a change of use to an HMO

You have 6 months to move to the term mortgage

For the mortgage:

You can borrow 75% of the GDV figure.

The fees are reduced across both products.

There are very little legal fees to move from bridge to term and it is quick!

What are the benefits?

  • It keeps the costs down of bridging – arrangement fees, legal fees, and valuation fees are reduced
  • It offers certainty over the exit.
  • The process to move from bridge to term is quick and simple.

Benefits of Bridging to Purchase Your Next Deal

by

What are the benefits of using bridging over cash to purchase your next deal?

The Valuation

Your bridging lender will instruct a valuation and the surveyor will have your schedule of work, so you have a professional opinion on your now and after-works figures.

The surveyor will also pick up if there’s anything that the lender doesn’t like – for example its location, neighbors, or nearby commercial units.

 

The Legal Process

Although you will need your own solicitor to purchase property cash, they are not the lender’s solicitor and therefore won’t be able to get their take on any unusual legal issues. It is much more tricky to resolve lease issues for example after you have purchased a property. Using a bridge means we have access to a lender’s solicitor and know that the property is mortgageable.

 

It Frees Up Your Money

You can look to take on multiple projects if all your money isn’t tied up on one, which it may be if you are funding the deposit and refurbishment yourself.

You also have the option of borrowing your refurbishment costs, which on bigger projects can mean you are putting in as little as 30% of the purchase price and the purchase costs.

 

It Doesn’t Cost Twice As Much

The preconception is that bridging is expensive, but there are lots of ways we can reduce the overall cost if you need a bridge and an exit with the same lender.

Lenders can reduce arrangement fees, valuation costs, and legal fees if you use them for both, and Baya will only charge an admin fee for the refinance if we have arranged the bridge.

What do you need to know about care provider leases for HMOs?

by

They used to be an issue with lenders but we now have many options!

So what do you need to watch out for?

Experience

The preconception is often that you need plenty of experience in this sector but that is not the case!

You only need to have had one BTL for one year to be eligible for an HMO with a care provider lease in place.

Type of property

Each care provider needs a specific type of property, whether it is the number of bedrooms, amount of communal space, etc. It’s a balance between making sure that it is not so bespoke you can’t do anything with it if this doesn’t work out without spending further money if for any reason it doesn’t go through.

Area

Again, this will be dictated by the type of tenants. Location is so important to your care provider, so make sure you find this out before you start sourcing your property. Distance to local amenities, transport links, and particular things that need to be close (or not!) are vital to your provider.

The Lease

Ask for a copy of one of the care providers’ draft leases in advance. Lenders will need to approve them, so it is important that you give us a copy of this to get it approved, in principle, before the transaction starts. A recent case needed some amendments which the care provider agreed to, but this may not always be the case. This is really important as the fund is dependent on it.

What are the benefits?

  • Less uncertainty of tenant turnover.
  • No void periods or non-payment.
  • The contract usually includes all bills.
  • No referencing or upfront costs.
  • Property is handed back as you left it.

 

What options do you have for your next deposit?

by

Here are some ideas for where your funds can come from…

Savings

This is the easiest one, but often the one that gets used up first! If you’re serious about getting into property then you really do need to think about how you can save money from your day-to-day expenses to create funds for it.

Especially for your first project when the lender wants to see you’re using your own funds. Look at a budget planner, find a savings account that encourages monthly savings, and go from there. There may be some sacrifices that need to be made!!

Refinance of your Residential or Other Property

Refinancing your residential property can be seen as risky by some, but you are moving the equity from one property to another.

Remember that your home may be at risk if you do not keep up repayments on it, so look at the overall picture. It’s an idea to explore though.

Gifts

Often when investors are looking for investor funds, family and friends are first on the list. It’s an easier sell, but comes with more pressure! Gifts from family are easier to use for your first few projects (before you build up some experience) and it counts as your own money!

Joint Ventures

This is an alternative where you are relying on the experience of someone else. It means your JV partner has more security over their funds and equally, you have more support for the project. You are able to split the shareholding to reflect the funds and experience of all applicants too, so it’s flexible.

One thing to remember is that generally, all applicants to the mortgage will need to sign a personal guarantee to be jointly and severally responsible for the loan, so ensure that your JV partner is happy with that setup.

Company Loans

Something we are seeing more of is where clients have a (non-property) company that is profitable and they want to use these funds to put into the property.

It is a tax-efficient way of doing things, but ensure to check with your accountant.

Investor Funds

Once you’ve built up a track record of projects – usually one or two similar-sized projects – you can move on to using other people’s funds!

Loans are an option where you run out of your own money, but ensure you factor in the overall costs.

Most lenders will now be able to use investor loans where there is a loan agreement in place and no charge on the security property. There needs to be a clear replacement method and any interest payments need to be taken into account so bear that in mind.

With the right strategy, you will be able to recycle some of your funds, so you’re not starting from scratch with each project – although “no money left” deals are hard to come across at the moment!

Speed-up Your Mortgage Application

by

What can you do to speed up your mortgage application?

With everyone so busy, and delays from all angles it seems, it’s more important than ever to ensure that we are as proactive as we can be to keep it running smoothly…

First up… EPCs!

You now need a valid EPC for all term mortgages, residential and commercial.

Some lenders will now give you a discount on rate and/or arrangement fee so it is in your interest to have a new one carried out if you have recently carried out a refurbishment.

So please ensure you have a valid EPC (A-E) to ensure completion is not held up.

Planning and building regulations

The lender’s solicitor will want your solicitor to confirm that all planning and building regulations have been signed off before the completion of term mortgages.

Please ensure that this is the case, and if there are any areas that could present an issue then tell us immediately so we can help resolve them or use a lender who would be happy to use title insurance and avoid the issue!

Engage with your broker early!

It can take a week or so for an AIP, and then another 3 weeks to book a valuation so you need to give yourself enough time.

Rates are also changing so much at the moment, and they are only going one way! So get your application in early to secure your rate.

Don’t instruct your solicitor until you have an AIP from a lender

Most lenders have a small panel of solicitors they will use, and most offer a ‘dual representation’ service where they can use one company to act for you and the lender.

So speak to your broker as they may have a preferred company to use out of the panel.

This will avoid unnecessary costs of searches with the wrong company – and many lenders don’t need searches anyway.

Be prepared for it to take longer than you expect!

We used to comfortably be able to complete it in 8 weeks but it taking at least 12 weeks at the moment.

we can mitigate some of this by starting early, but legal is taking a long time!

Make sure you are factoring in this time with bridging/investor finance, as well as the plans you have for these funds.

 

How Can I maximise my HMO valuation?

by

As an investor, you are generally trying to pull as much out of each deal to allow you to move on to the next one. Getting the right valuation for your HMO is key to this!

There are a few ways lenders value HMO’s, so here is a simple explanation for them all:

Bricks and Mortar Valuation

Most lenders will value an HMO up to 6 bedrooms as an empty house regardless of how much you have changed the layout. The comparables they will use are for similar-sized properties in the local area.

In order to achieve more than this, you need to work with a couple of specific lenders who have other options but all lenders will value on a bricks and mortar basis where the existing layout has been kept; for example where the only change has been converting a lounge into a bedroom and perhaps adding an en-suite.

Commercial or Investment Valuation

This is valuing based on yield. The lender will use a net market (not actual) rent, using local comparables.

Most specialist lenders will use this method where the property has Sui Genaris planning, and some will also use it where Article 4 applies.

There are a couple of lenders in the market that will also consider this where you have a larger HMO and C4 planning where the internal layout has been significantly changed so that it would be more likely to be resold as an HMO rather than a house. There would also need to be a good demand for both room rentals and the resale of an HMO.

What’s the commercial valuation calcuation?

Annual market rent – 20%

Average yield

This is an approximate calculation and figures can vary but it’s a good guide.

HMO Hybrid Valuation

Where your property does not fit into the previous definitions, there are a few lenders that have an alternative. There are other lenders who say they do and don’t so you do need to be careful!

It is up to the surveyor to decide if the internal layout is significantly different from a house and whether it would be more likely to sell as an HMO. This would typically be where the property has all double bedrooms with en-suite, the kitchen has multiple cookers, sinks, etc. and the living space is comparatively small. There needs to be a demand for resale as an HMO too.

How do surveyors come up with a hybrid figure?

They take the purchase price of the property (or market value where it was purchased under value) and add the cost of the conversion. This is based on an average cost so may not be exactly what you have spent.

Having a good valuer pack and a clear schedule of work is so important.

This is a guide and doesn’t always work perfectly, so if you would like to talk through your case and whether it’s worth trying to get that hybrid or commercial valuation then please give us a call!

Autumn mortgage update – what’s new?

by

This week I want to cover a few things as we head into autumn to highlight some great opportunities that we have in the mortgage market. There have been so many changes over the summer as lenders push to write more business in a increasingly competitive market.

Last night at Watford PIN we were talking about what opportunities are around at the moment and changing strategies to adapt to the current market. The key part to that is knowing what finance is available as this is key to pricing . I’m always happy to chat through any ideas you have and how to structure your deals.

First time landlords for HMOs

There has been a few new options for this recently. I’m forever having conversions about whether it’s worth starting with single let’s or to go straight in to HMOs. There’s usually a compromise somewhere and starting with HMOs has meant a slightly higher interest rate. However, we have a new product to the market that allows first time investors to obtain a competitive HMO rate at 70% loan to value. This is fantastic for cash flow, allowing you to maximise your monthly income from your first property.

85% LTV for bridging

I’ve mentioned before that we can can arrange 85% bridging loans for purchases needing a light refurbishment. What has now changed is that you no longer need any experience to do this! This is fantastic for first time investors (who own their residential property) to allow them to put less into a deal and open up new opportunities. There are some caveats as usual, so always best to check with us and we can run through the details.

80% LTV buy to let and HMO products

It’s important to look at the pros and cons of 80% mortgages for investment property. As you start to buy more properties and become a portfolio landlord, lenders will carry out a check on your outside portfolio and it needs to be below 75% loan to value so you need to be aware of this.  Having said that, they do have their place. Where you have a property that you feel has been under valued, an HMO being valued on a bricks and mortar basis, or where you have other properties that you aren’t able to get a high LTV with to balance out your portfolio. Having more 80% options is definitely a good move forward, and as always it drives down the costs when there is more completion.