From refurbishment mortgages to bridging loans.
Whether you are looking for buy-to-let or to sell your property, renovation can turn big profits! However, buying and renovating costs need to be planned carefully and a worthwhile investment established. There are many options available to the property investor.
There are lenders who operate on a part-retention basis. During the application the lender often acquires a value prior to renovation and a proportion of this will be paid. Lenders normally retain some of the funds to be released when the work is complete. This type of loan is subject to a much lower Loan To Value (LTV) rate, although the lender will want at least a quarter of the purchase price up front. The downside is that this type of funding is only available for properties that require minor refurbishment.
Contrary to popular belief, bridging loans offer competitive interest rates and flexible terms. Used for very short term up to 24 months, most lenders will accept any property or land as security. Used as a stop gap between a main line of credit such as a mortgage, bridging loans are often aimed at landlords and small property developers.
Bridge To Let Loans.
Somewhere between the two above, bridge to let loans fund both the short and long term stages. Short term finance is offered initially with an option to move to long term finance when required. There is a clear exit strategy for the bridging part of the loan and wioth both products under one roof the tranisition between the two is seamless. However there normally is a fee when moving to the second stage of the loan.
It should be noted that most lenders will require borrowers to put their own finances into a project before making any payments. Also borrowers will only ever receive a percentage of the total cost meaning they will need to fund a significant portion themselves.