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Bridging loan to bring property in line with new EPC standards

Bridging loan to bring property in line with new EPC standards

The client: An experienced property investor approached us looking for finance to purchase a further buy to let property. In addition to managing his property portfolio, the client is also an antiques dealer.

The property: The property in question is a three-bed detached house within the London commuter belt. In a prime location, the client believed it to be a great investment, however there was a slight issue… the property’s EPC rating was F. From April 1st 2018 landlords have been unable to grant a tenancy to new or existing tenants if the property’s EPC rating is F or G.
Before the client could let the property, he would need to increase in the EPC rating to at least an E. To do this, he planned to install a new boiler and replace the wall insulation.

The finance: As the house was deemed unlettable, it would not qualify for buy to let finance, so we suggested that the client purchase it using a bridging loan raising sufficient to be able to make the necessary improvements. Once the works are completed and the EPC rating has been reassessed, he can then refinance the property onto a buy to let mortgage.
The client’s good-size deposit was made up of savings which had been accumulated from both his rental income and antiques’ business.

The application process: The client agreed that a bridging loan would be the best way forward. We presented him with a variety of workable options and he selected a product with a six-month term. We then helped him collate all the necessary documentation in preparation for submitting the loan application. This included the following information:

  • Itemised list of all properties with his portfolio including borrowing and rental income
  • Proof of ID, residence and income
  • Statement of assets and liabilities
  • Costed schedule of works to be carried out on the property (including an estimated timescale)
  • Solicitors

Having passed the credit check, the lender swiftly underwrote our client and the property and a formal offer for the full amount was promptly issued. The client plans to finish the renovations within three months giving us time to help him secure a suitable buy to let mortgage before the term ends.

Here are the details of the deal:

Property Details

Property value: £530,000

Loan amount: £344,500

LTV: 55%

Rate: 0.64%

Term: 6 months

Lender arrangement fee: 2% of loan amount (£3,897 added to loan)

Monthly payment: nil (interest rolled up)

Consultant: Steve Bedford, 01732 471609

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

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Mortgages for Business Ltd is registered
in England and Wales No. 2502713.

Registered office:
17 Kings Hill Avenue,
Kings Hill, West Malling,
ME19 4UA.

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Mortgages for Business Ltd is authorised and regulated by the Finance Conduct Authority (No. 313537) to transact regulated mortgages. We are a credit broker, not a lender. We work with the whole of market in sourcing a lender for you; we may receive a commission from the lender, and this amount varies between lenders. The FCA does not regulate some investment mortgage contracts. Mortgages for Business Ltd is a founding member of the National Association of Commercial Finance Brokers, the body that promotes best practice within the commercial finance industry. Telephone calls may be monitored or recorded for training purposes.

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