Bridging Loan for HMO Property
Bridging loans offer short-term finance for those who need to quickly raise capital on a property, or secure a loan on a property considered unmortgageable. Landlords often use bridging loans for HMO properties or make improvements to them.
Bridging loans are becoming increasingly popular with landlords at the moment due to changes in the way they pay tax on their rental income from HMO properties.
Why landlords use bridging loans
Although landlords often use bridging loans to purchase HMO properties when they need to move fast and don’t have time to apply for a mortgage, they are increasingly being used by landlords to refurbish properties and increase their rental value.
How buy to let bridging finance works
Bridging loans are usually offered with loan terms from 1-18 months, although longer loan terms can be possible.
You can normally borrow comparable amounts to a mortgage and the loan will generally need to be secured on the property it is to be used for. However, you may also be able to secure the loan against an additional property in order to borrow more or get a better interest rate.
You will normally pay an arrangement fee (typically 1-2% of the capital) and interest (which may be charged monthly, or rolled-up and paid when the loan is repaid). Depending on the lender you may also be charged an exit fee (also normally 1-2% of the capital) when you repay the loan.
Applying for a landlord bridging loan
Bridging finance is normally only available through intermediaries such as loan brokers. This is because lenders who offer bridging loans are normally private banks and lenders or dedicated subsidiaries of high street banks, none of whom typically deal directly with the public.
You will therefore usually need to apply for a bridging loan through a bridging loan broker. It is a good idea to choose a broker who is whole of market – so you can be confident you are being offered the very best deals available.
Find a bridging loan for buy to let property
Our free bridging loan calculator offers a quick, fuss-free way to find bridging finance for rental properties. All you have to do is plug in some basic details about your borrowing needs and personal finances to see leading deals on HMO bridging loans from across the market.
Need a bridging loan for an HMO property? Get in touch with our friendly expert team of loan brokers using the contact form on the right or by calling 0117 313 6058.