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Bridge to Let Finance for Property Investors: What To Know

bridge to let loan

Bridge to let lenders offer services that allow for the investment freedom for those that are ready for a leap to the world of property investment. Find out here what bridging finance for property looks like from lenders and for borrowers.

What Is Bridge to Let Finance?

Bridge to let loans are a branch of bridging finance that offers the opportunity to potential property investors to purchase residential or even commercial property to rent out for the foreseeable future therein making a consistent flow of profit. 

As getting a mortgage can be incredibly lengthy, and finding the right provider even more so, there is a solution to bridge this gap so that when anybody wishes to act fast when a property opportunity arises, they can. 

Short term property finance bridges the gap, meaning there is no need to wait around for mortgages or rushing into the wrong provider as a bridging loan is there to pay the seller while working on a better solution to long-term funding.

These loans ultimately serve as a temporary solution to bridge the gap between the purchase of a property and the securing of a longer-term mortgage, making for more reactive decision making when on a property hunt.

How Bridging Finance on Property Works

Bridging finance typically works by the following structure, although do note different bridge to let lenders may have varying rules and regulations that make for different structures than the typical industry standard.

The first step is the consultation, meaning your chosen lender will be able to talk to you about what the loan is for, in this case, property and the specific situation for yourself.

Lenders will then get to know the key factors of eligibility, like the property type, the requested loan amount, the exit strategy, and of course, the affordability. 

This is done quickly, most buy to let lenders understand that the reasoning for lending is due to the need for a fast turn around, so it is unlikely that there are going to be any lengthy waiting times. 

Once this is in place, due diligence and compliance is conducted, followed by approval or disapproval of the loan. Once funds are released, the bridging finance loan is ready to be used on the desired residential or commercial property to rent. 

What Can a Buy to Let Bridging Loan Be Used For?

Bridging loans for commercial property or residential property doesn’t only mean that the funds can be used for acquisition, in fact there are a range of ways related to the property that a bridging company can help with. 

Some of most common uses of a bridge to let loans include, but aren’t limited to:

  • Property Acquisition

  • Property Refurbishment

  • Property Development

  • Property Conversion

  • Auction Purchases

  • Portfolio Expansion

  • Bridge Finance for Rental Income

  • Property Investment Opportunities

The best way to find out if your particular situation is suited to a buy to let bridging loan and if you’d fit the eligibility criteria, then it's recommended that you speak to a lender and explain your situation. 

How Much Can Be Borrowed for Bridge to Let Loans 

There isn't a straightforward answer to the amount in which can be borrowed from residential or commercial bridging finance lenders. The amount is determined upon the lender, their maximum and minimum lending criteria and if you’re eligible. 

While some may have a cap on their lending capabilities, there are some larger scale lenders that may not have a cap on their lending for bridge to let finance. 

The only way to find out the exact amount that is classed as maximum for a lender is to speak to them directly and have the numbers prepared on the budget that you hold for your property. 

However, there are certain determining factors that you may find are a commonality across the industry. For example, a loan-to-value (LTV) Ratio which can determine the amount based on the percentage of the value of the property. This essentially means that the LTV is equal to the percentage of the property’s value that the lender will lend. 

The best, and only way to find out how much a particular lender is willing to lend is on a case by case basis, so it is recommended that you speak to them directly to better understand your eligibility. 

Frequently Asked Questions

Are bridge to let loans regulated?

While some bridge to let finance providers are indeed regulated, there are some instances that may fall out of the scope of the FCA.

For example, if there are bridging loans that are not classified as regulated mortgage contracts then they may not be subject to particular regulations. The bottom line is, some lenders are, and some aren’t, dependent upon what is required on the specific loan itself, it is recommended that you check this on the provider prior to taking out the loan. 

Is it hard to get a bridging loan?

Not yes, nor no. Getting a bridging loan is relatively easy if you have the right preparation in place and are well aware of the eligibility criteria and adhere to such.

However, there may be instances wherein you’re unaware of the terms and don’t have enough evidence to provide the lender with the necessary information to suggest that you can afford the loan.

If that is the case, then the process is likely to be more difficult, the best way to approach this is to instead research on what is necessary and be as prepared as possible going into the application for the best chance at success.

Do bridging loans do credit checks?

Yes, bridging loans are highly likely to conduct hard credit checks.

This is to ensure that there is assessment being conducted on the creditworthiness of the borrower which helps the lender to evaluate the risk of lending any funds.

Not only that, but it is necessary to help in security matters, like verifying the identity of the borrower and assessing their past lending behaviours. Without this hard evidence, there is little basis to go off on a lender's part which could leave them in a contract with people who haven’t been truthful about their financial position which is incredibly dangerous for both lender and borrower financially.

MS Lending Group offers a proven track record of tailored financing solutions and a commitment to exceptional customer service. With speed, flexibility and reliability MS Lending Group is a trusted company who will help you achieve your investment objectives to grow your portfolio, get in touch with us today to find out how we can help.

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