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refinancing

Is there an alternative to bridging finance?

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If you have a property that is mortgageable, but you need to do some work in order to let it out, do you need to use bridging?

We have another option!

It works well if you are looking at a smaller refurbishment where you don’t think you’ll get enough uplift to warrant paying for a bridge.

It is also an option if you are looking for a long-term project requiring planning for example if you are can wait to start bigger works.

It allows you to buy a property where you need to carry out a light refurbishment in order to let it out.

The valuer will see the schedule of works and can take this into account when looking at the value as well as the market rent figures. This is especially important when you need a higher rental figure to make the deal work.

This can work for residential as well as semi-commercial properties where they are tired and in need of a refurbishment before you can let them out.

You can use it for existing HMOs where there is a license in place but it needs some refurbishment to attract more rent or different tenants.

We can use a desktop valuation in the majority of cases, enabling a quick completion where required.

There is a 2-year fixed with a 2-year tie-in, allowing an opportunity to reassess what you are looking to do at that point. They also have a 5-year fixed with a 2-year tie-in, offering you some more flexibility.

There are some things to be aware of, as always:

  • The property does need to be habitable in its current condition.
  • No heavy refurbishment or planning.
  • You will need to show you’ve got 3 months’ mortgage payments in the bank to cover the refurbishment period.
  • They are lending based on their current condition and value, so there’s no room for uplift at this point.

CASE STUDY: Lenders’ Flexibility In An Uncertain Market.

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Why flexibility with your lender is so important in an uncertain market?

 

What do I mean by FLEXIBILITY?

Most lenders will tie you into a product with early repayment charges if you leave it.

The only alternative would be a tracker rate, but they are rare and expensive. And don’t offer you much certainty with the base rate on the move currently!

So, how can you get the flexibility to refinance when you need to??

Why would I need flexibility??

With an uncertain market, would you like the option to refinance and pull some more money out at a point that suits the market rather than a fixed date?

Do you want to do some work on the property, but not yet so you don’t want to put it on a bridge yet?

Is your property tenanted so you can’t complete work until some point in the future?

How does it work?

We have a lender who will allow you to refinance with them at any point and they will waive the early repayment charges.

They will offer a new product, with a reduced arrangement fee and legal, but a new valuation (the one thing you need!)

This allows you true flexibility when you choose to refinance, and you can move to and from a bridge to carry out work at a much lower cost.

 

As an example…

A client bought a property to convert to a 6-bedroom HMO with a bridge (before they knew about us!)

They refinanced to a term mortgage with a yield-based valuation in December 2020 when the market was so uncertain and valuations weren’t the best! The value was £570,000 (in Bath)

They are currently refinancing now that valuations are more positive and we have just got the new figure of £695,000.

We lent 75% of both figures, so that’s over £90,000 released for another project!