Bridge to let: Everything you need to know

Pre-approved exit strategy, faster approval, and more

Bridge to let: Everything you need to know

Bridge to let mortgages work well for homebuyers who would be unable to afford a property using a traditional mortgage. But what is bridge to let finance? Who does bridge to let work best for and what are the main advantages? Here is everything you need to know.

What is bridge to let?

A form of bridging loan, a bridge to let mortgage is designed to aid investors who want to purchase a home they would otherwise not be able to afford using a more traditional mortgage. A standard bridging loan is optimal for developers who want to sell off their property not long after buying. Bridge to let mortgages, on the other hand, are more ideal for landlords who want to retain the property in order to house tenants.

How does bridge to let work?

When you get a bridge to let mortgage, the initial bridging loan is used to buy a property. In other cases, the initial bridging loan is used to develop a property. When the home is finished and you are housing tenants, it is transferred to a buy to let agreement.

The major differences between bridge to let loans and other financing options is that they have a far faster turnaround time and come with a pre-approved exit strategy included. Unlike most traditional mortgages, bridge to let loans are completed within days, making them optimal for any borrower looking for short-term financial support for their long-term gains. As mentioned, you will also need to have an exit finance strategy in place to secure your bridge to let loan. This is also a major advantage of bridge to let loans: after you have bought the property, you then let it out to paying tenants.

A good bridge to let application will allow you to move from a bridging loan to a buy to let mortgage with the same lender, since the exit strategy is already included in the agreement. That means you will have less hassle when applying for a bridging loan and a buy to let mortgage with different lenders. It will also mean that you will only complete on the bridging finance after the buy to let mortgage has been approved.

When should you bridge to let?

If you are not able to get a buy to let mortgage on a property, you should get bridge to let financing. Bridge to let finance is also ideal if the property you want to purchase requires renovation, but you are short on money, you buy a home at an auction, or you do not want a mortgage. Other scenarios that lend themselves best to bridge to let finance include: your capital is being spent in other areas or you are adding value to your buy to let.

While there may be other reasons that you will want a loan for your buy to let, the main reason for this type of financing is to raise capital. Typically, bridging loans have a timeframe of up to one year before needing to be paid off. Because lenders can be flexible on the timeframe, it is important for you to enquire first.

Advantages of bridge to let

Pre-approval of exit finance. One of the ways a bridge to let loan is so advantageous is that it helps you prove your exit strategy prior to approval. In other words, you will not have to leave your exit strategy to chance or market the home if you are unable to get a buy to let mortgage.

Bridging loans can be completed quicker. If time is an issue for you, bridging loans are a great option, since they can be underwritten and approved more quickly than traditional mortgages. How much more quickly? As opposed to a few months for a standard mortgage, bridging loans can take a few days (or weeks) to complete.

Bridge to let mortgages can help break property chain issues. Too many homeowners miss out on their dream homes because they are waiting to sell their current property. If you go with a bridging loan, you will be able to buy your new home while you are still waiting to sell your current home (if both are OK’d by the lenders). Because bridging loans close the gap financially, you will be able to buy a home and pay it off in full after your sale goes through.