Bridge-to-Let Case Study: Flexible, Fast-Access Finance for BTL Investments

Bridging finance continues to play an important role in helping ambitious investors bring more derelict, rundown and non-standard properties back onto the UK market. As the disparity between demand and available inventory grows, profitable opportunities will continue to present themselves for new and experienced property developers.

In particular, specialist bridge-to-let loans are making it easier and more affordable than ever for investors to cover the costs of short-term property redevelopment projects. With bridge-to let, the facility is designed to automatically transition to a longer-term repayment product, when the initial term comes to an end.

A product that blends the best of both worlds, bridge-to let offers the speed and flexibility of bridging finance, combined with the long-term affordability of a conventional buy-to-let mortgage.

Highlighting the flexibility and versatility of bridge-to-let, Aspen Bridging, one of the UK’s leading providers of affordable bridging loans, recently published the following case study:

“Aspen Bridging has provided a £557,500 light development bridge-to-let (BTL) loan to a developer seeking cost-effective options for their latest project.”

“The client, who owns a six-bedroom guesthouse in Bath which they want to convert into three two-bedroom residential apartments, has chosen Aspen’s new bridge-to-let product that ultimately gives them maximum flexibility across the term.”

“Taking advice from the introducer, they chose the product for heavy refurbishment bridging with a one-year BTL period to avoid the need for a development exit bridge. They also had the flexibility to transfer immediately on to the cheaper BTL term after finishing works so they can test the market to either refinance or sell.”

“The loan was completed at 80% LTV day one, plus commitment to fund 100% of works costs over a 24-month term, with the initial 12-month bridge on a flat rate of 0.75% pm followed by a 12-month BTL period at 4.49% pa.”

As competition for attractive properties becomes increasingly ferocious, the risk of being beaten to the punch by a competing bidder is likewise at an all-time high. With bridging finance, the borrower is effectively empowered with the immediate spending power of a cash buyer, with a facility that can be arranged in a matter of days.

This can make it a particularly useful product for taking advantage of time-critical purchase and investment opportunities, where traditional property loan mortgage applications would be too time-consuming. Typically charged at a rate of around 0.5%, bridging finance for BTL property purchases can also be uniquely cost-effective when repaid promptly.

For more information on the potential benefits of bridge-to-let or to discuss your requirements in more detail, contact a member of the team at UK Property Finance today.