The buy-to-let (BTL) landscape has changed significantly in recent years, with higher interest rates, slower price growth and a changing tax landscape causing many property investors to remain uncertain about committing to and being tied to a BTL mortgage.
One of the main reasons behind this train of thought is due to the fees often involved in exiting deals early and the potential for rates to fall in a constantly shifting and uncertain economic environment.
This has been further exacerbated by the calling of a surprise general election on 4 July and the consequent change of government.
Yet despite these challenges, the BTL market continues to present landlords and investors with a popular and attractive investment opportunity, particularly for those looking to capitalise on the market’s ongoing popularity by tapping into the house price growth expected in the coming years.
According to recent figures from the Land Registry’s UK House Price Index, property prices in the UK increased by an average of 1.8% between March 2023 and 2024. Although slower than in previous years, the increase in property prices shows the market’s resilience in tougher market conditions, with further and stronger growth expected as the year progresses.
For those borrowers who remain reluctant to fully commit to a BTL mortgage in the current climate, a bridging loan presents an option for investors to build their property portfolio without being tied into a longer-term product.
Bridging ‘excellent financial tool’ for investors
As a form of short-term financing, a bridging loan can serve as an excellent financial tool by providing investors with a flexible and immediate capital injection. This ability to quickly raise capital means they can then use the money to purchase an additional property or carry out improvements to an existing one, including simple updates such as painting or decorating through to more extensive work such as full-scale repairs and renovations.
Taking out a bridging loan also offers investors the chance to bring underperforming assets up to scratch, increase their value and improve yields in order to achieve maximum returns.
One of the many other advantages of taking out a bridging loan is that they can often be processed quickly and therefore present an ideal financing solution in situations where an investor needs to move quickly and seize opportunities when they arise.
This is particularly attractive in situations where there is a very short completion deadline, such as buying a property below market value or at auction, as the ability to move quickly will stand them in good stead for making a purchase, as the financing can often be secured in a matter of days.
In many cases, this may allow the investor to take advantage of a property opportunity they may have otherwise missed, or refurbish a property and bring it up to a higher standard before selling it on or remortgaging it onto a longer-term product and renting it out to repay the loan.
At Kseye, bridging loans start from £150,000 up to £25m with a maximum loan to value (LTV) of 75% available. Terms of between two and 12 months are standard across the product range and borrowers are free to move without penalty after three months.
Our personalised approach to lending also means we work with brokers and their clients to provide fast, flexible and tailored solutions that are specific to their borrowing needs, ensuring the needs of the client are fully met.
While there is no denying the uncertainty in the market over the last few years has caused ripples in the BTL sector, investing in property continues to offer an attractive proposition for investors looking to expand their property portfolios.
Using a bridging loan as a means of capital raising can enable investors to gain swift access to cash and provide them with the ability to move quickly and more freely on a purchase or project, while also providing a short-term option for those reluctant to tie themselves into longer term borrowing.
