Switch to a BuytoLet mortgage within six months of purchase

by Neil Patterson

9:01 AM, 26th March 2013
About 6 years ago

Switch to a BuytoLet mortgage within six months of purchase

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Switch to a BuytoLet mortgage within six months of purchase

New commercial finance facilities are offering the option to switch bridging finance to a  BuytoLet mortgage within the normal 6 months period other lenders require you to wait.

Borrowers are now able to bridge  70% of initial purchase price and then, within six months, switch to a BuytoLet remortgage based on 70% of the ” new, higher valuation figure.

The best available product is 0.69% per month for the bridging finance and then 4.7% plus Libor for the Buy to Let term facility.

 

Example case below:

Finance required for a renovation property purchase price of £65,250.

After works value approx £115,000 to £125,000.

Cost of works approx £10,000 renovation timescale 4 to 6 weeks”.

The Plan was to secure funding for 70% of the purchase price with the choice to either re-finance straight away (ie without the usual 6 month restriction) at 70% of  the new Loan to Value or sell without penalty which would then realise the profit.

The deal found:

Interest Rates = 0.69% per month for the first 6 weeks then 4.7% plus Libor for the Buy to Let term facility.

Fees – 1.95% lenders arrangement fee for the purchase, then just 1% to switch onto the Buy to Let term facility.

There is no exit fee for the initial finance which was used to purchase the property. When the finance is switched to the agreed Buy to Let facility only from then onwards is there an early repayment charge of 3%

Summary

Original purchase price = £65,250 (inc deposit invested) + £10,000 (for works) = £75,250

New value = £120,000

Therefore, £120,000 – £75,250 – £5k underlying costs  = 39,750 Gross achieved profit (in addition to full rebate of the £29,575 of initial personal outlay)

All this was achieved in 6 weeks proving that specialist Commercial and Bridging finance still has lenders willing and able to lend.

To discuss any Bridging finance with our preferred commercial finance broker please use the relevant links below, call us on 01603 489118 or email info@property118.com

For Bridging finance please click here.

If you would like to add your own requirements and search for the most popular available Buy to Let products please click here

Buy to let auction property finance calculator



Comments

Stephen Pears - Mortgage Consultant HD Consultants

15:50 PM, 15th March 2013
About 6 years ago

I can vouch for the original poster as I am currently doing the same and it would appear to be some lender as details provided in example are the same as what I am using

Howard Reuben CeMap CeRER

9:10 AM, 13th July 2013
About 5 years ago

Yes, this product is becoming more and more popular with savvy investors.

The latest deal we arranged was for a BTL'er who sourced a property in Bristol, and secured it for approx £165k, recent sold comparables at £190k+. In fact, with a small bit of refurb this could now be worth £215k'ish.

Options? 1) sell on immediately for a cash profit, or 2) keep, refinance the short term lending on to a BTL and remove bridge and original deposit, and add to portfolio.

Win, win???


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