Landlords using bridging loans to adapt their businesses
Landlords have been faced with extra costs over the last year or so. Stamp duty has been raised, tax relief on buy-to-let mortgage interest payments cut, and older properties have required energy efficiency upgrading work.
Some small landlords have sold their properties and stopped buy-to-let investing. Others have formed limited companies to save tax, and many are looking at diversifying their portfolio by investing in commercial or semi-commercial property.
Professional landlords have had to be more astute in their business. Many London landlords are looking at investing in areas in the North of England that provide higher rental yields than London. If a landlord spots a good property deal, they may have to act quickly to purchase it before other potential buyers. Increasingly, they are turning to bridging finance for loans to complete time-sensitive purchases before a long-term mortgage can be arranged.
Bridging brokers can arrange bridging loans for landlords. Another key role of the broker is to advise on the exit strategy, a plan for when and how the bridging loan will be repaid.
A broker’s responsibility does not end after the loan has been arranged. They can stay in touch with the borrower to check that the exit strategy is going according to plan. A good broker builds a relationship with a landlord so that they are the first place that the landlord will contact to source a loan each time they find a suitable building to invest in.