What is Bridge-to-Let Finance?

Bridge-to-Let finance is primarily used by people who are looking for a loan on a property they intend to rent out, but is currently in need of extra building work or a complete refurbishment.

When you purchase a property as an investment with the intention of letting it out there are a number of different finance options open to you. If the property you are looking to buy is currently in a state of disrepair, it is highly likely that it will not qualify for a buy to let mortgage. The reason for this is that most lenders require the property to act as security for the bridging loan, and if it doesn’t have a usable bathroom or kitchen for example it probably won’t qualify for a mortgage.

Generally buy to let mortgage lenders are looking for properties that can be let out immediately and not requiring extensive refurbishment. This is where Bridge-to-Let finance comes in as it will give you the funds needed to either buy or renovate the property. When you have completed the renovation and the property is ready to rent out you should qualify for a regular buy to let mortgage. This will then provide you with the funds to pay off your Bridge-to-Let finance.

When Would I Use Bridge-to-Let Finance?

Bridge-to-Let finance is a tool that can be used in a number of different ways to help provide you with the finance you need to purchase, or renovate your buy to let property. Listed below are some of circumstances in which a client may choose to take advantage of the benefits offered by Bridge-to-Let finance.

● If you are unable to source a buy to let mortgage
● If the property is in need of refurbishment but you don’t currently have the funds
● If you are buying a property at auction
● When you have the capital needed but it is tied up elsewhere
● If you are converting a house into an HMO
● If the property is a commercial buy to let
● If you are looking to add value to your buy to let

This is not a finite list, you may require finance for your buy to let for a different reason, however the main reason for Bridge-to-Let finance is to raise capital. You will generally have a maximum period of one year before repayment of a bridging loan. However, lenders may be flexible on time frames, so if you need a longer period it’s worth asking the question.

Different Bridge-to-Let Rates

The typical cost of a Bridge-to-Let mortgage loan is between 0.55% and 1.5% a month, and most bridging lenders will only offer you a loan to a value of 75%. It may be possible to get 100% loan to value however additional security will be required.

However, what you need to take into account is that every lender is different, and could possibly charge fees in addition to the loan. We would always advise that you work out the figures around your investment carefully to make sure Bridge-to-Let finance is a viable option.

Prior to buying any property it is advisable you speak to an estate agent to find out how much it is likely to be worth once a renovation has been completed. This will allow you to work out whether any fees and the rates are right for you.

A lender will always undertake their own valuation, however it is always better to make sure the numbers align before taking out the finance.

To get the best rates you should do a comparison across a number of different lenders. This will help ensure that you are not paying more than you need to for your loan. Let’s face it when you purchase a buy to let it is an investment for the future, and as such it is essential you take care of the numbers.

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Bridging Loan Calculator

Try our bridging loan calculator here. Simply fill out the information and click “Continue”.

There are only three steps involved in the process and it should only take around five minutes to complete!

We’ll do the rest and contact you back with a bridging loan quote as soon as possible.

Do I Need an Exit Plan with Bridge-To-Let Loans?

When you are looking for Bridge-to-Let mortgage loan it is imperative you have a clear exit plan. Every lender will require details of how you intend to repay the loan. For example, lenders will ask you for the potential market value of your property once the refurbishment has been completed. This will help them assess the suitability of your proposal.

Bridge-to-Let mortgage finance usually has a one clear exit strategy which is a buy to let mortgage on completion of the work. This will generally give you the capital needed to pay off your loan in full. Once complete and you have tenants in place you will then have an investment property that generates income on a monthly basis.

If you are unsure whether Bridge-to-Let finance is suitable for you then contact the professional team here at Pyxis and we will be only too happy to advise you on the best course of action.

Benefits of Bridging Finance

The main benefit of bridging finance is the speed at which funds can be made available to the borrower. A lending decision can be agreed within a couple of hours of us receiving the initial enquiry and funds made available within days. In a competitive and fast-moving property market this allows the borrower to act quickly and secure or refinance a property.

Land Bridging Finance Basic Criteria
Loan To Value Up to 70%
Loans Available 1st & 2nd Charge
Loans Size £50,000 to £10,000,000
Terms 1 Month to 36 Months
Adverse Credit Acceptable
Rates From 0.45%

Why Use Pyxis Capital?

The Team at Pyxis Capital have extensive knowledge of bridging finance and take time to understand a client’s needs and requirements.

You will have a single point of contact from start to finish and will also be provided with direct contact details for one of our Company Directors.

Most importantly you won’t be left with the finding an Exit Strategy from your bridging finance facility. As this is something that will be researched on day one and if possible, agreed in principle with a long-term lender.

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