Our client purchased a two bedroom terraced house in Leicester at auction for £100,000. The property required refurbishment, and the client needed a bridging loan that would allow her to complete the purchase within the required timeframe.
The plan was to carry out a basic refurbishment before refinancing onto a buy to let mortgage, with the aim of releasing equity towards her next investment property.
The Problem
The client was a first time buyer, first time landlord and non owner occupier, with no previous property investment experience. She was also using a gifted deposit, which added another consideration for lenders.
With an auction completion deadline to meet, the client needed a lender who could accommodate her circumstances and move quickly. It was also important to establish a suitable exit strategy, as the client intended to refinance onto a limited company buy to let mortgage following the purchase.
The Solution
Amanda, our Specialist Mortgage & Protection Advisor, searched through the bridging market and identified a lender who could use a desktop Automated Valuation Model (AVM), avoiding the need for a physical valuation and helping to reduce delays.
Alongside arranging the bridging finance, Amanda also identified a buy to let lender willing to consider a day one remortgage at open market value for a non owner occupier with no previous landlord experience.
The bridging loan was offered the following day, and the client completed the purchase within two weeks.
The Results
Purchase price: £100,000
Loan amount: £70,200
Valuation: £150,000
Interest rate: 1% p.m.
Loan term: 12 months
Actual bridging exit: 3–4 months
Exit strategy: Day one remortgage at 75% LTV based on OMV
The buy to let remortgage was accepted at 75% LTV with the lender agreeing to a day one remortgage based on the property's open market value (OMV). This was an important part of the strategy, as many lenders would only consider the original purchase price for a day one remortgage which would have limited the amount of equity the client could release.
The client carried out approximately £20,000 of refurbishment works and was able to exit the bridging facility within 3-4 months, minimising interest costs and releasing funds towards her next investment property.
Whether you're buying your first property or growing your existing portfolio, we can help you find the right finance solution for your project. Get in touch.
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