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Bridging vs Standard Mortgage

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How does bridging differ from a standard mortgage?

I am often asked what the benefits of bridging are, and you all know I’m a big fan!

But…..

How does bridging differ from a standard mortgage?

and how does that help with your next deal??

Lenders do not assess the mortgage on affordability

This means that it doesn’t matter what the rent would be for the property in its current condition, they won’t restrict how much you can borrow based on that figure.

For example…

If the property is in poor condition, the valuer will give a lower figure of say £600 pcm. When it is refurbished you may be able to rent it for £800, but the £600 may not be enough to borrow the full amount.

The Legal Process is much quicker.

The lender’s requirements for searches and documents from your solicitor are so much smaller than a standard purchase so we can often complete quicker than even a cash purchase, where you would usually want full searches.

The property can be in any condition, as long as you have a plan that works!

You don’t need a kitchen or bathroom, there can be structural issues, and dampness… the list is endless!

As long as you have a plan for the works, the funds to do them (and some experience if they are extensive) then we can do it.

This will open up the properties available to you, you aren’t competing with everyone else.

The property is appraised on your schedule of works and costings

We provide the valuer with your schedule and costs of work, so you will get the current figures, as well as post works figures.

You will have a guide for the GDV and rental potential once it is completed. This will give you some certainty over your project and whether it is viable.

If you are happy with the figures we can usually use the same valuer for the survey for the exit.

If you would like to have a chat about your project and how bridging could help then please give me a call or drop me a dm…

Holiday let’s: we can now use actual holiday let rental!

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Here we are at our Friday blog day again. I hope you’ve had a productive week!

As things start to open up we are starting to see more mortgage products appear in the market too. In the residential market this is most noticeable with the new 95% LTV products – a sign that confidence in is improving! And in the buy to let market we are seeing more options for holiday let’s. This year, with all the uncertainty around foreign travel, I think we will see an increase in demand for UK holidays. It will be interesting to see how that plays in the next few years – will we see more people falling in love with UK holidays and see their benefits?

This week I want to tell you about a new holiday let product we have available. For a while now we’ve not had great options for holiday let’s, but as things start to reopen and the chances of foreign holidays continue to look bleak lenders are spotting an opportunity.

Until now we have been able to lend up to 75% of the purchase price or current value  based on the 12 month AST rental figure. 

What this meant was the lender would only leverage it against a standard AST income, rather than the actual holiday figure, which may be higher.  Although you could use the property for holiday rental.

This can often work, but certain locations and property types don, and we’ve struggled with options for that until now.

A lender who used to be happy with holiday let’s (pre Covid) has now re-entered the market. There are some restrictions, the biggest being that the maximum loan to value is 70%; the rates, though, are lower in most scenarios to the options we previously had, so you may decide that 70% works.

The lender requires you to have a minimum income (between all applicants) and some previous experience. This can be with buy to let’s, it doesn’t mean you need to own a holiday let.

The big benefit is the income calculation. We are able to use 30 weeks income, at an average of the low, medium and high season rates. This can give a much higher maximum loan. 

Their minimum loan is £50,000, so covers all areas of England; the term can be from 2-30 years with interest only options available for the term. Rates start at 3.84% for a 2 year product at 70%.

As always, if you have any questions or scenarios you want to run through then please give us a call!

Enjoy your long weekend everyone.