Designed to bring the best of all worlds together in a single affordable facility, bridge-to-let has become the tool of choice for investors and developers across the UK. Bridge-to-let combines the speed, accessibility and flexibility of a bridging loan with the affordability of a longer-term buy-to-let mortgage.
The idea being that along with taking advantage of time-critical property purchase and investment opportunities, bridge-to-let also enables the investor to gradually repay the balance of the loan over several years.
With bridge-to-let, both products are organised and provided by the same lender, meaning only one application, one set of paperwork and one set of arrangement fees (where applicable). In terms of potential uses, bridge-to-let can be just as flexible and versatile as a conventional bridging loan.
A few examples of popular uses for bridge-to-let in the UK include the following:
Investors often set their sights on maximising their ROI by purchasing properties in need of light to moderate renovations. Examples of which include basic decorating and aesthetic improvements, installing new kitchens or bathrooms, upgrading to higher-quality windows and so on – anything that does not involve major structural alterations.
Bridge-to-let can be used to cover both the purchase costs of a rental property and the subsequent renovations that take place, in order to maximise potential rental yields.
Conversion to HMO
Another popular option for landlords looking to boost their ROI by generating more revenues from the same property is to convert a home into an HMO. A typical example of this is a student house, wherein multiple occupants share the same property but are responsible for their own rent payments.
Bridge-to-let provides the flexible and affordable funding needed to purchase a standard residential property and convert it into an HMO.
HMOs can be particularly profitable when positioned in close proximity to town and city centres, or educational institutions like universities. However, seasonal fluctuations in demand must be taken into account with HMOs for students, which for up to three months of each year may sit vacant.
Development Exit Loans
Last up, bridge-to-let can also be useful for providing investors and developers with welcome room for manoeuvre if they have not yet decided what to do with their property at the end of the initial bridging term.
Upon completion of the BTL property’s renovations and improvements, the investor may still be weighing up the benefits of selling the property outright, as opposed to letting it out. Alternatively, it could simply be that they have not yet found a suitable buyer, or would like to hold out a little longer to get the best possible price for the property.
In both instances, bridge-to-let provides more breathing room than a traditional bridging loan, giving the investor all the time they need to decide what to do next.
For more information on the potential benefits of bridge-to-let or to discuss your requirements in more detail, contact a member of the team at UK Property Finance today.