Bridging Loan for Buy-To-Let

Buy-to-let property has been an established option for property investors for many years. However, getting finance to purchase these types of properties can be challenging, as the criteria for buy-to-let mortgages can be quite comprehensive.

Mortgage lenders will only lend to investors who can afford to take the risk on of buy-to-let investments. This includes being able to cover the costs of the mortgage during a tenant-free period. Lenders require borrowers to be earning over a certain salary and have an excellent credit record without being over-stretched on other borrowings. 

Raising deposits for buy-to-let mortgages can be a challenge for a borrower, Novellus can be flexible in taking into consideration the specific circumstances around the asset and borrower when issuing terms.  Due to the strict guidelines, a buy-to-let mortgage can take a long time to be approved, which is one of the reasons property investors turn to a bridging loan for buy-to-let properties in the first instance.

What is a bridge-to-let loan?

A bridge to let loan is another term for a bridging loan that will be specifically used to buy a property to rent out. Investors can buy any rental property with a bridge-to-let loan, including residential and commercial. This type of funding is a short-term option that helps bridge the gap while organising long term finance.

Why choose a bridge-to-let loan?

The buy-to-let market is very competitive and when property investors spot a good deal, they are always looking to make a quick purchase, as they may risk losing out to someone else. Bridge-to-let loans are usually approved within a short timescale allowing property developers access to funds for purchases quickly.

Properties that could be viable as a buy-to-let often come available through auctions, although they may require extensive refurbishment before being rented out (often falling outside of many lenders criteria). Bridging loans can be used when buying properties at auction which are presently not habitable. Unlike most traditional mortgage lenders, the application process for Bridging loans does not typically discount uninhabitable properties. 

If investors are struggling to raise funds, using a bridging loan for buy-to-let deposits ensures that the borrower does not miss out on any good deals, whilst also providing a greater time frame to secure long-term finance.

Considerations

The borrower will need an exit strategy in place, which is usually refinancing the property with a longer term buy-to-let mortgage.

The loan term provided by Novellus is generally between 6-12 months. The borrower can pay off the loan at any time within that period without incurring any early repayment fees (save for the interest payable during the repayment notification period).

Find out more

To help discover the approximate costs involved with bridging finance use the online bridging loan calculator for guidance.

Novellus offers a stress-free application process. For the best way to find out if they can assist you is to call today on 0203 397 4871 or fill out an application form.

Any data you provide Novellus Bridging will be used in the decision making and processing of any future loan. The data we collect will be shared with our legal representatives and potentially other third parties to assess your suitability and for future transactions on any loan(s) with Novellus Bridging. We will hold information securely for up to 5 years after your contract with Novellus Bridging ends. Should you wish for us to delete all traces of data we hold about you after your contract expires or should you wish to request details of data we hold about you please email info@novellusbridging.co.uk

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