Look at this property. Somebody’s left it as a right old mess but it’d make a lovely refurb project for one of our buy to lets.
But the key question is, if we were going to try and buy this as a buy to let so that we could do the refurb, how would we finance it?
Because the reality is that most buy to let lenders want the property to be what they call habitable or lettable before they’ll lend on it.
And by any stretch of the imagination, this property is not habitable or lettable even though some buy to let lenders actually have quite relaxed views on what habitable or lettable actually means.
So, how would we finance a property like this? Well, one of the ways which I’d be looking into, and I’d be working very closely with my very good mortgage broker on this, is using a product like a bridge to let product.
Now, what is a bridge to let product?
There’s at least two mainstream lenders who at the moment provide a bridge to let type product and as the name suggests, as it says on the tin, this particular product provides you with a bridge to buy the property and to then do the refurb. And then once the refurb is done you can then refinance onto that lender’s buy to let mortgage product.
The great thing is that this product comes as single applications, so when you apply for the bridge to let the valuer will go out, they’ll provide a valuation on the property as is, they’ll look at the list of works that you’re going to do to the property, and then they’ll give a valuation of what they think the property is going to be worth once the works are done. Obviously, if the figures stack then you can then go ahead and buy the property and do the refurb confident that you’re going to be able to get the buy to let loan once you’ve done the refurb.
Now, contrast that with perhaps getting a bridge from a different lender and then trying to get a buy to let loan four months, or five months, or six months later once you’ve done the refurb from a completely different buy to let lender. You don’t have the same certainty. But because this is all rolled up, because the bridge to let is rolled up as one product, when the valuer goes out and values the property and the bank then comes back and give you the offer of the bridge to let, you know with almost certainty that you’re going to be able to get the buy to let mortgage once you’ve done the refurb. So there’s no guesswork involved. It gives you certainty and clarity.
The other thing, of course, is that it’ll save you fees because the bridge and the buy to let are all rolled up in one product.
So, why is this important and why would I be thinking about using a product like that?
Well, quite simply because most, if not all, buy to let lenders will not lend on a property that requires this amount of work. What they require is a property which they call habitable or lettable. Now, unfortunately there’s no one standard definition of what habitable or lettable actually is. Some lenders want the properties to be virtually pristine while others are quite relaxed about it being in not-great condition, being very tired, just so long it’s got a working kitchen, a working toilet. But it gets to the point where no buy to let lender would lend and this property, I think, is at the point where there’s so much work to be done you won’t be able to get a traditional buy to let mortgage but you would be able to get a bridge to let. And that’s going to be much easier to arrange, and organise, and oversee than trying to get a bridge from lender A and then go and get a separate buy to let loan from lender B.
So, if you’d like more details of bridge to let products, or if you’re looking for buy to let finance, or if you’re looking to finance your HMOs or your serviced accommodation properties, and you do not have a good mortgage broker, then I’ll be very happy to introduce you to my mortgage broker who’ll be able to help you look at your financial requirements, and hopefully be able to steer you in the right direction so that you can get your finance, just email me thepropertyteacher@gmail.com and I’ll put you in touch with my very good mortgage broker.
I hope you found this video useful and informative, and if you did then please come over to my website www.thepropertyteacher.co.uk where you’ll find loads more great property-related resources including free special reports to download and my best-selling series of e-books which includes The Successful Property Renovators Workshop, 63 Common Defects In Investment Property And How To Spot Them, and if you’re just starting out in property or you want to grow your portfolio you may be particularly interested in The Successful Property Investors Strategy Workshop in which I’ll take you through exactly how I started and built my property portfolio starting literally with none of my own money, and how I built a portfolio of £2 million worth of property in just four years, that was starting from scratch.
I’ll take you through everything that I did right so that you can copy me and do the same, and I’ll also show you everything that I did wrong so that you can avoid the mistakes that I made and so that you can progress in property and be far more successful, far more quickly than I ever was.
And this is based upon my own real-life experience, and it took me about four years to actually work out how to do property investing properly, but in the 200 pages in The Successful Property Investors Strategy Workshop, I’m going to show you all that four years knowledge condensed down so you can use it immediately.
And until next time.
Here’s to Successful Property Investing.
Peter
Peter Jones
(ex) Chartered Surveyor, author and property investor
https://www.ThePropertyTeacher.co.uk
PS. By the way, I’ve rewritten and updated my best-selling e-book, The Successful Property Investor’s Strategy Workshop, which is an account of how I put together my multi-property portfolio, starting from scratch and with no money of my own, and how you can do the same.
For more details please go to:
https://www.ThePropertyTeacher.co.uk/the-successful-property-investors-strategy-workshop