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What is Bridge-to-Let (and How Does it Work)?

What is Bridge-to-Let (and How Does it Work)? 5

For many investors looking to pick up low-cost properties at auction, their main objective is the same:

To renovate the property to an appropriate standard and let it out to tenants, in order to generate the highest possible rent yields.

What is Bridge-to-Let (and How Does it Work)? 6Purchasing properties at auction presents the issue of coming up with the full payment for the lot within four weeks. Conventional mortgages on property loans are therefore not viable options, which can take months to underwrite and issue. 

This is where bridging finance can help, providing investors with rapid access to significant sums of money in a matter of days. Specialist bridging loans are routinely used by investors as a form of auction finance, covering the property’s purchase costs for prompt repayment a few months later.

But how does repayment of a bridging loan take place, where an investor chooses to retain (rather than sell) their property? Is bridging finance a viable option for buy-to-let property investments, and what are the repayment options available if so?

Specialist Loans, Bespoke Solutions

Bridge-to-let is one of several specialist types of bridging finance, designed with this exact purpose in mind. With bridge-to-let, the loan issued covers the costs of purchasing and renovating the property, in the same way as a conventional bridging loan.

Where bridge-to-let differs is in how the loan is designed to automatically transition to a longer-term facility, when the initial loan term comes to an end.

With a conventional bridging loan, full repayment is required after a few months – typically when the property purchased is sold. With bridge-to-let, the original loan is repaid with a conventional buy-to-let mortgage, after which the borrower can repay the outstanding balance over the course of several years.

The Benefits of Bridge-to-Let

A specialist bridge-to-let product can therefore combine the best of all worlds.  The facility can be arranged in a matter of days, property purchases/renovations can be conducted at short notice, and the full balance of the loan can be repaid gradually.

In addition, the two funding facilities can be issued by the same provider, keeping things simple and affordable for the applicant. Borrowing from a single provider means only one set of paperwork, one set of fees and one set of contractual terms and conditions to ensure you are content with.

With bridge-to-let, the provider of your bridging loan is also your exit strategy from the product. This can make it much easier to qualify for bridging finance in the first place, as the lender knows in advance exactly how your loan will be repaid. 

Independent Broker Support

As bridge-to-let loans automatically transition to a long-term mortgage or property loan, it is essential to ensure you get a good deal from a top-rated lender. This is where independent broker support can prove invaluable – an experienced representative to negotiate the best possible deal on your behalf.

Your broker will also ensure you fully understand the potential pros and cons of bridge-to-let, before you enter into a legally-binding contract with your chosen provider.

What is Bridge-to-Let (and How Does it Work)? 7About the Author

Craig Upton supports UK businesses by increasing sales growth using various marketing solutions online. Creating strategic partnerships and keen focus to detail, Craig equips websites with the right tools to rank in organic search. Craig is also the CEO of iCONQUER, a UK based SEO company and has been working in the digital marketing arena for many years. A trusted SEO consultant and trainer, Craig has worked with British brands such as UK Property Finance, Serimax, djkit and also supported UK doctors, solicitors and property developers, gain more exposure online. Craig has gained a wealth of knowledge using Google and is committed to creating new opportunities and partnerships.

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