9:01 AM, 26th March 2013, About 8 years ago 2
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%
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 firstname.lastname@example.org
If you would like to add your own requirements and search for the most popular available Buy to Let products please click here
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