Benefits of Purchasing with Bridging Finance

Purchasing and refurbishing a property using bridging finance can offer significant benefits, particularly when it comes to increasing the property value. This is especially true for those looking to convert a property into a House in Multiple Occupation (HMO). For landlords looking to tap into the HMO market, purchasing a property with bridging finance can offer many advantages.

Speed and Flexibility

Bridging finance is known for its speed, with funds typically secured in a matter of days. This is crucial for investors looking to buy on time-sensitive opportunities. Bridging loans are also flexible, allowing investors to borrow based on the property's current value and the projected value after refurbishment, known as Gross Development Value (GDV). This flexibility is especially valuable for properties needing work to be converted into HMOs.

Bridging for Refurbishment

HMO conversions can involve major renovations, and bridging finance can be perfect for these types of projects. The loan can cover both the purchase and refurbishment costs, allowing investors to purchase properties that others may avoid due to their condition. This flexibility enables investors to unlock greater value in properties that require work.

Exit Strategy: Bridging Finance to Buy-to-Let Mortgage

After completing the HMO conversion, investors can exit bridging finance by refinancing onto a buy-to-let mortgage. Sometimes working with the same lender for both the bridging loan and buy-to-let mortgage can offer benefits:

1. Faster Transition: The lender's prior knowledge of the project can ensure a smoother, quicker refinancing process.

2. Simplified Communication: A single lender can streamline communication, reducing delays and miscommunication.

3. Lower Costs: With a clear understanding of the property, the lender might reduce the need for additional valuations or administrative costs.

Conclusion

Using bridging finance to purchase and refurbish a property into an HMO can be a strategic, efficient move to unlock the full potential of a property.

Get in touch with our friendly and knowledgeable team for more information.

Some forms of Buy to Let mortgages are not regulated by the Financial Conduct Authority.