Bridging loan for house refurb then refinance onto buy to let mortgage

Our client is a teacher who also owns a handful of rental properties. He approached us for help in securing finance to buy a run-down 4-bed detached house in a popular university town. Because the house needed refurbishing before it could be let out, it was not suitable for a buy to let mortgage, so we arranged a bridging loan in order that the client could carry out the work.

He spent £20k of his own funds making the house habitable and then found a family who were prepared to rent it for £1,850 per month.

Six months down the line, with the tenants in situ, the client approached us again to help him refinance onto a more affordable, long-term buy to let mortgage. Even though the refurbishment had only taken three months, he waited longer in order to secure a better rate, as most lenders will not allow remortgages within six months of purchase.

We found a lender who was willing to help and their surveyor valued the property at £50k more than the purchase price.

Here are the details of the deal:

Purchase price: £450,000

Short-term loan amount: £315,000

LTV: 70%

Rate: 0.73% pcm bridging loan

Term: 8 months interest serviced

Lender arrangement fee: 1.95%

Property re-valued at: £500,000

Refinance amount: £360,000

LTV: 72%

Rate: 3.99% 2 year fixed buy to let mortgage

Term: 15 years interest only

Lender arrangement fee: £995

Completion date: August 2014

Consultant: Jeni Browne, 01732 471647

10th September 2014