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How Refurbishment Buy to Let Works | A Precise Mortgages Special

How Refurbishment Buy to Let Works

How refurbishment buy to let works Precise Mortgages


Their innovative approach to buy-to-let involves optimising rental returns through property refurbishment before leasing.

This unique proposition combines the convenience of a short-term bridging finance loan for renovations with the security of transitioning to a long-term buy-to-let mortgage. This transition is based on the post-renovation property valuation.

This comprehensive solution guarantees landlords a smooth exit strategy. It ensures that the initial mortgage price will remain fixed upon completion as long as the property meets the expected post-refurbishment valuation. Additionally, utilising the same solicitors for both the bridging loan and the long-term mortgage minimises overall costs.

This strategy maximises rental yields and provides landlords with financial predictability and peace of mind throughout the process. How Refurbishment Buy to Let Works

How refurbishment buy to let works | The Scenario 

RefurblishmentA broker was approached by a representative of two individuals venturing into property ownership for the first time. They aim to acquire a three-bedroom end-of-terrace property through an auction, necessitating minor refurbishment to make it suitable for rental purposes.

The clients inform the broker that they intend to take charge of most of the renovation tasks, such as installing a new bathroom and kitchen, conducting decorative work, and fitting new internal and external doors. This hands-on approach aligns with their preferences and serves as a cost-saving strategy. Notably, utilising the same solicitors for both the bridge loan and the long-term buy-to-let arrangement reduces overall expenses.

This collaborative effort between the buyers and the broker ensures a tailored and cost-effective refurbishment process for the prospective buy-to-let property.

How refurbishment buy to let works | The Solution

In the realm of refurbishment buy-to-let, a strategic approach unfolds to empower clients with the flexibility to accumulate interest during the refurbishment phase. This unique proposition allows them to harness surplus cash effectively for property enhancements.

A tailored bridging finance loan is extended upon carefully assessing the applicant’s financial stability, ensuring ample income and minimal unsecured debt. This financial package encompasses the rolled-up interest, totalling £78,649, at a favourable 65% Loan-to-Value (LTV) ratio against the £121,000 auction purchase price.

Distinguishing itself further, the financing model permits borrowers to include additional fees beyond the LTV. The customers, recognising this advantage, opt to integrate £583.10 for the facility fee/product fee, along with a £25 telegraphic transfer fee and a £295 administration fee into the loan amount. Concurrently, they choose to settle the £550 valuation fee and £840 legal fees upfront.

Connect for IntermediariesWith a streamlined application process, approval is swift, and the bridging finance loan is finalised in under two weeks. This timeframe is utilised for a comprehensive legal evaluation and property valuation. The anticipated market value post-improvements stands at £135,000, accompanied by a monthly rental potential of £650. This seamless integration of financial solutions and property upgrades exemplifies a holistic and efficient approach to refurbishment buy-to-let ventures.

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