With many high street lenders placing restrictive lending criteria on their mortgage products, increasing numbers of landlords are turning to less conventional forms of finance in order to take advantage of the thriving buy to let market. According to figures just released by a leading bridging finance lender, the gross lending figure is about to reach the unprecedented figure of £800 million and more than 82% of all loans made this year have been to residential property investors.
What is bridging finance and how can it help you?
Bridging loans are secured on a professional valuation of the property and unlike a traditional mortgage, there are very few background checks made on the person applying for the loan. They are typically a short-term finance solution and most loans are repaid after a few months, although they can last up to two years.
In my experience, bridging loans can be very useful, although you need to have a clear exit strategy, so if you are interested in buying a property, but cannot secure the funding in the short term, a loan of this nature can help you invest in a property when speed is of the essence. Bridging loans can also fund property purchases when substantial repairs are required prior to tenants moving in—once the work has been completed and your property is let, you can switch to a long-term mortgage.
However, although bridging loans can be very useful for landlords, it is a good idea to obtain specialist advice prior to signing on the dotted line to ensure this is the right product for you.
