Bridge to Let Loans

Bridge-to-let bridge loans allow you to complete a rental property purchase fast, and your lender will use the property you want to purchase as collateral for the loan. You'll usually look at using this type of loan when there is a fantastic rental opportunity on the market, and you want to complete the property transaction as quickly as possible, but you don't want (or don't have enough cash) to use your own capital to buy the property. A buy-to-let mortgage can take several weeks or months to arrange, which can mean you miss out on the purchase opportunity, especially when there is competition from other buyers. We can arrange bridge-to-let loans quickly, and you'll be able to draw down funds in just a few weeks, so you can snap up ideal rental properties almost as soon as they become available. 

In other types of bridging finance deals, there are multiple options for your exit – your exit refers to how you will repay the loan. However, with a bridge-to-let loan, you'll usually always exit via a buy-to-let mortgage. Sometimes you will arrange this with the same lender, and in other cases, you will use one lender for the bridge-to-let loan and a second for the buy-to-let mortgage. What we suggest we arrange for you will depend on how much you want to borrow and the type of lenders we think are best for you to work with. Mainstream lenders can offer both, but if we believe it's better to arrange finance via a niche bridge-to-let lender, you may need to refinance with a different lender for your buy-to-let mortgage.

We can arrange bridge to let loans and your exit to a buy-to-let mortgage simultaneously, so you'll have both the finance you need now and your exit strategy planned out. If your initial bridging lender and your long-term finance lender are the same party, your exit will form part of the initial bridge-to-let loan agreement.  

Bridge-to-let loans are more expensive than conventional mortgages, usually because of how fast lenders execute these loans, the slightly higher risk factor than in long-term property finance deals, and because you borrow for less time. Adding to the overall cost of this type of finance, you'll also need to pay additional fees for a bridge-to-let loan, including legal fees, valuations, etc. Bridge-to-let loans usually have a term of around 12 months, although some lenders will offer longer loans on a case-by-case basis if you need to borrow for longer. However, lenders will only offer a longer term if it makes sense with your exit strategy. 

The amount you can borrow depends on your financial situation and lender. LTV of about 70% is the norm for bridge-to-let loans. Sometimes, a lender will offer you a lower LTV if the project presents a little more risk, and sometimes lenders will offer you a little more. Higher LTV bridge-to-let loans are possible, but not every lender offers more than 70% LTV. Anything you can borrow above 70% LTV will depend on your financial stability, financial standing, and credit history. 

You can use a bridge-to-let loan to buy property you will rent out as well as to carry out renovation or refurbishment after the purchase, if necessary. If you are looking at undertaking work on the property, lenders will want to see details of your plans and permission to carry out the work if you need permission to complete the project. Lenders will also be looking at how you plan to manage the project in terms of costs and the project itself. Because you'll use a bridge-to-let loan on property you plan to rent out, lenders will want to make sure you don't go over budget on the development or refurbishment work. This will be important because you will need to fund this work yourself and any delays to renting out the property can delay getting tenants in and your ability to exit. Lenders will also want to ensure that you can complete the work within the timeframe needed and rent it out within the bridging loan term for the same reason.