As the Buy-to-Let market adapts to meet its next set of challenges, whether this is looking at affordability difficulties, less flexibility in the marketplace or macro-economic challenges. The property finance sector is facing several hurdles which haven't been seen the positive prospects of 2023 and act quickly.
2022 saw a rise of people turning to short-term finance to support property purchase, with bridging loans having a 14% increase, equaling £716.2m worth of lending. This increase represented the highest figures since 2019.
When opportunities arise, they are not always expected and as such need to be acted upon to secure the deal. The challenges Bridging and Buy-to-Let are facing has created opportunities for those who are flexible, knowledgeable and can act quickly. Specialist lenders like West One who specialise in complex cases by utilizing a manual approach, will succinctly a Bridging and Buy-to-Let loans to create the concept of a 'Bridge-to-Let'.
A Bridging loan can be utilised by Buy-to-Let investors as they seek to move on opportunities which they may not have foreseen. It can provide a fixed-term loan used to secure a property intended for rent but when a basic mortgage or deposit is not yet in place. Once the property is secured, investors would exit the agreement and move to a more traditional BTL mortgage with the property rented out at the earliest opportunity.
An aspect behind the growth and opportunity around Bridging is how it can be used in combination with other propositions, for example, Buy-to-Let. As the Buy-to-Let market is extremely competitive, moving quickly can be key to securing the right property before other investors can swoop in. This can sometimes mean agreeing a price or even purchasing (at auction) before you have a mortgage or sufficient deposit in place.
In such situations, a combination of a Bridge and BLT arrangement could be pivotal to securing finance and completing the deal. Specialist lender West One are renowned for completing Bridging deals in short time-frames, with one of the quickest completions having been done in just three days. Speed is a key focus for West One, with the industry standard of 56-59 days to complete a Bridging loan application, West One averages 24-28 days. The speed at which West One cases are reviewed and transacted means investors can move onto their next steps without delay.
Another factor causing opportunities to arise quickly is considerations around housing stock. This is also proving difficult to predict, with schools of thought commenting landlords may sell properties which do not meet EPC standards, falling prices and investors waiting to see where BoE rate settles.
On the first consideration, instead of improving the quality of properties landlords may opt to sell the property and reinvest. It’s reported 38% of current properties which have been put up for auction come from Buy-to-Let investors who are looking to exit the market quickly. For investors seeking opportunities, auctions can represent an opportunity to secure a property below market value, but they need to move quickly and need funds to ensure the property is meets the necessary requirements.
In both Bridging and Buy-to-Let it is often about three key pillars to complete a deal, speed, flexibility, and ease. One lender, who can facilitate the bridging transaction and then provide the exit of a Buy-to-Let loan can achieve the fundamentals of the three pillars mentioned.
By having both specialist Bridging and Buy-to-Let business development teams inhouse, West One have a diverse array of expertise in both fields and can process the case in one rather than needing to go to another lender or department. This allows for a smoother transition from a Bridge to a Buy-to-Let, and can prevent any delays to the completion such as lenders asking repetitive questions or borrowers having to supply the same document multiple times. The experience and reliability of dealing with a lender who can facilitate multiple aspects of a transaction can be worth their weight in gold for the broker and the end client in securing the property in a timely manner.
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