Bridging loan for house to flats conversion

Bridging loan for house to flats conversion

05.07.17 | Written by: Gavin Elley

We were approached by a married couple looking to purchase their second buy to let property - a 3-bed terraced house in Manchester.

Before renting out the property the couple were planning to convert it into two self-contained flats. Not only would this increase the potential rental income it would also increase the overall property value by circa £60k.

Neither husband or wife had ever carried out a project like this before, so we needed to approach a lender which would offer short-term finance to inexperienced applicants.

The couple expected the works to take just over six months to complete at which time they plan to refinance onto a buy to let mortgage.

Funds were received within 28 days of applying.

Here are the details of the deal:

Property value: £134,000

Loan amount: £93,800

Expected value(after works): £200,000

LTV: 70%

Rate: 1.25% per month

Term: 9 months

Lender facility fee: 2% (£1,876)

Lender exit fee: interest for 1 month 

Monthly payment: £1,172

Rental income: £1,500 expected after works complete

Anticipated yield: 9% pa

Consultant: Gavin Elley, 01625 416398

ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.