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Wednesday, April 05, 2017

BTL mortgage update - Bridging Finance

Jane Simpson at Property Hawk Mortgages says:

Although we are predicting a relatively flat year for the overall buy-to-let mortgage market, there will still be plenty of lending opportunities for landlords who are willing to seek them out.

When a market is retracting or at least showing signs of slow growth, it is often of strategic benefit for businesses to look at ways of diversifying their income streams and this is no different for those operating in the buy-to-let mortgage market.

Property Hawk Mortgages is essentially a buy-to-let mortgage specialist and the obvious way to expand our proposition is to find products and services that complement our core first charge buy-to-let mortgage business. For this reason, we have now ventured into the second charge and bridging finance arena, but for buy-to-let only.

Bridging and second charges

My impression from discussions with numerous pundits in the industry including lenders, networks and other buy-to-let brokerages, is that there is a growing demand for alternative buy-to-let solutions. 

Second charge buy-to-let mortgages or short term finance such as bridging can resolve issues faced by landlord clients who are looking to raise capital. For example, those tied in with their existing mortgage provider or those on a very low reversionary rate with no incentive to remortgage away from their current product.

There are numerous reasons for landlords to raise capital and the purchase of a further buy-to-let property is a common one. However, the recent PRA regulations and subsequent changes to rental calculations has meant that some landlords are looking for ways of generating additional deposits to meet the tougher rental requirements. Second charges provide a possibility for doing this and a way for brokers to generate supplementary income.

At Property Hawk Mortgages, we are also receiving a growing number of enquiries about bridging finance solutions and now offer a range of both second charge and bridging products with Together Mortgages, Shawbrook, Masthaven and Precise.

Bridging is certainly growing in popularity among landlords and its reputation for being punitively expensive seems to be diminishing. If used intelligently, bridging can be an excellent resource for buy-to-let investors and enable them to make the most of opportunities and bargains in the rental property market.

For example, bridging is an excellent short term solution for landlords buying property at auction. Auction properties can often be obtained at a reduced price and allow investors to avoid paying higher stamp duty. Bridging can also provide an alternative for landlords purchasing cheaper properties that need some refurbishment before they are let out. There are numerous light refurbishment products available through core lenders, but a bridging specialist can often provide the resource to carry out more extensive renovations.

Email:info@propertyhawkbtlmortgages.co.uk
Tel: 029 2069 5446


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