How can bridging finance boost your buy to let portfolio? Here, we look at how you can use bridging finance to maximise your profits.
Bridging finance is becoming a much more popular property finance type, and for good reason. With an increasing number of landlords using bridging in their portfolios, we share 5 of the most commonly used opportunities available to you with this specialist type of finance.
1. Property Refurbishments
One of the main ways that property investors might use bridging finance is to fund refurbishments to existing properties, whether to make aesthetic improvements, upgrade existing utilities, or even increase the EPC rating. These projects can become expensive rather quickly, and bridging finance is a great way to access the funds to cover the cost of the improvements quickly.
Using bridging finance here is a great way to significantly increase the property’s value and your rental income. Property Investors typically exit onto a buy to let mortgage or sell the property for a profit. Either way, the proceeds are used to repay the bridging loan.
I’d like to know more about financing property refurbishment >>
2. Auction Purchases
Bridging finance is best known for auction purchases. When buying at auction, you need to finance the purchase extremely quickly, often in as little as 28 days, so accessing the funding fast is essential.
Standard buy to let mortgages are unsuitable here, so bridging finance is the ideal solution. Once the purchase is secured, landlords can exit onto a buy to let mortgage as long as the property is in a lettable condition and doesn’t require refurbishment.
If you are interested in purchasing at auction, it’s essential you speak to our mortgage experts first, who can help you explore the type of bridging rates you can access and how much you can borrow. This is the only way to ensure you make well-informed property investment decisions in the auction room, and it will prevent any delays with your application.
I’d like to know more about auction finance >>
3. Chain-Breaking
Using bridging for chain-breaking allows you to purchase a new property either before funds are released from another property sale, or to prevent a purchase chain breaking down if your mortgage application is taking too long. This way, you not only ensure a smoother purchase process, but you face fewer risks of delays and don’t have to worry about losing out on the purchase.
4. Portfolio Expansion
Bridging finance is a great way to purchase new property investments quickly. In the current competitive property market, it is also a great way to avoid delays and ensure you secure a great new property for your portfolio.
As a type of short-term finance, landlords can quickly secure properties without the risk of losing out to other buyers or facing long property chains (as mentioned above). This helps you to expand your portfolio more efficiently, and you can exit onto a buy to let loan once the purchase has completed.
5. HMO Conversions
Depending on the scale of the project, you may be able to use bridging finance to convert your existing buy to let into an HMO. HMOs typically benefit from much higher rental yields than standard buy to lets, and the demand for these properties continues to grow.
If you need to carry out any heavy refurbishments to the property, such as an extension, then you will need to secure heavy refurbishment finance. However, bridging finance is great for smaller projects, such as fitting new doors or kitchens, which could allow you to convert your property into an HMO. Speak to one of our experts to explore the best finance option for you.
Visit our bridging finance page here for more information.
Speak to an expert
To explore how bridging finance can boost your property portfolio and see what types of bridging rates you can access, submit an enquiry here or call us on 0345 345 6788.
