Jubilee Property Finance

Bridging Finance for Buy to Let Explained


Using Bridging Loan Financing to Purchase Buy to Let Properties

The housing market in the United Kingdom has been on the decline for the past few years and does not show any signs of improvement.

Because of this, it is becoming more and more difficult for individuals to purchase homes outright, leaving a large opportunity to rental and buy to let properties.

With the demand for rental properties growing, more and more investors and property developers are looking for ways to fund purchasing and renovating buy to let properties in order to make a substantial profit.

Choosing Bridging Finance for Buy to Let Properties

One of the biggest advantages to using bridging loans to purchase buy to let properties is the speed in which the loans are approved and dispersed. This is a huge advantage for landlords, investors, and property developers who are looking to purchase quickly or have the opportunity to close sales on auction or foreclosed properties.

In the perfect scenario, a bridging loan can be applied for, approved, and dispersed to the borrower in as little as seven working days, helping to make purchases fast.

Additionally, bridging loans are a great short-term solution for this individuals looking for interim financing. This type of loan is generally repaid within one year of distribution and can be secured with either a property that is currently owned or other assets owned by the applicant.

Although the interest rates associated with bridging finance tend to be higher than traditional loans, they are much more flexible and allow the applicant to secure the funding they need right when they need it.

Why Choose Bridging Finance Over Traditional Buy to Let Mortgages?

When an investor purchases a property in foreclosure or that is put up for auction, the property will more than likely need some renovation done before tenants can occupy the building. Generally, lenders who provide buy to let mortgages will not extend this type of financing unless the property is habitable and there are tenants living in the space.

A bridging loan can help property developers bridge the financial gap between needing to make upgrades and securing longer-term financing.

It is important to remember, however, that bridging finance is not meant to be a long-term financial solution. Bridging loans are meant to assist applicants in purchasing and renovating properties quickly or to help fund a project while longer-term, lower interest rate financing is put into place.

Although bridging finance is helpful, it also comes at a price – interest rates for this type of financing is often much, much higher than the interest rates offered on traditional buy to let mortgages.