Bridge to let loans are designed for property investors who will ultimately let the property, but require a bridging loan in the short-term, usually while work is completed on the property.
Unlike a standard bridging loan, a bridge to let sees a lender offer a bridging loan initially, while pre-approving the borrower for a buy to let mortgage. This removes the risks involved with traditional exit strategies.
They can be used for almost any reason, however, some of the more common ones are the following:
We can offer bridge to let to individuals, partnerships, LLPs, Ltd companies, offshore companies and pension funds.
We can consider applications from overseas investors and expats, as well as UK and non-UK nationals living in the UK.
Adverse credit doesn’t preclude you form taking out a bridge to let mortgage. We’re can arrange a loan for borrowers with almost any credit problems.
The initial bridging finance element is usually arranged for a term of 1-8 months, before switching over to a buy to let mortgage. The buy to let part of the loan is usually arranged for any term up to 30 years.
Yes, we’re able to consider loans for borrowers with adverse credit, but these will be underwritten on an individual basis.
Not necessarily, as long as the works are non-structural, you’re likely to qualify even if this is your first project.
The amount you can borrow depends on several factors, with the ability to complete the works and let the property being key.
Our loans start at £25,000 and we lend with no maximum loan.
The ‘bridge’ element is calculated separately to the ‘to let’ part of the loan.
The bridging loan will usually be restricted to a maximum of 75% loan to value, with 80% available in some situations. Of course, the amount available will depend on several factors, the key ones being the property, its location, your plans for the property, your experience and credit history.
When moving over to the buy to let mortgage, the lender will also consider the expected rental income in addition to the above.
Subject to meeting the lenders criteria, the maximum loan offered on the buy to let mortgage is 75% LTV.
Where the monthly interest is rolled up or deducted from the loan, affordability usually plays very little role in the bridging element. That said, it’s crucial to the approval of the buy to let portion, and as it’s all approved alongside the bridging loan, it will need to be covered early.
Affordability is based on the rental income of the property and how that compares to your proposed mortgage payments.
The rules vary between lenders, but lenders usually expect your rental income to be at least 125-145% of your mortgage payment. Some lenders use ‘stressed payments’ in their calculations, which account for some increase in interest rates.
Where this is the case, they usually expect your rental income to be 125-145% of your ‘stressed payment. This is your payment at an interest rate of 5-6% usually.
Interest rates are usually tiered based on the LTV required, with lower rates being offered at lower LTVs. The lowest interest rates are usually offered on applications at 50% LTV and below.
The interest on the bridging loan element of your loan will be expressed as a monthly figure, with the ‘to let’ element being expressed annually.
There are a selection of products from each lender, with fixed, variable and discounted rates usually available.
When taking out a new loan, your application will usually be subject to fees, which can also impact the cost of your finance often including some of the following:
You will generally be expected to provide the following:
These applications take longer to complete than traditional bridging loans, due to the work needed to ensure that the exit can also be guaranteed.
The underwriting of buy to let mortgages is slower and more methodical, and this will ultimately be the factor that delays completion.
You can usually expect the application process to take around 4 weeks to complete (including all legal work).
