Summary
We recently helped our customer arrange a buy-to-let remortgage in Dorst, refinancing a bridging loan that had been used in connection with new build properties.
The case needed more careful lender research because there were two properties held on one title. We therefore needed a lender that was comfortable with both the property arrangement and refinancing the existing bridging finance onto a longer-term buy-to-let mortgage.
We found a lender whose criteria could accommodate both requirements and arranged the £580,000 mortgage our customer needed.
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The Scenario
Our customer was self-employed with a reasonable level of income, a good credit history and no liabilities recorded in the information provided.
They owned a property valued at £800,000. The properties had been funded using bridging finance and our customer now wanted to move onto a longer-term buy-to-let mortgage.
The mortgage requirement was £580,000 over a 30-year term.
The main figures were:
- Property value: £800,000
- Mortgage required: £580,000
- Loan-to-value: 72.5%
- Mortgage term: 30 years
- Mortgage purpose: Buy-to-let remortgage
- Product type: 5-year fixed rate
- Customer status: Self-employed
- Credit history: Good
The Challenge
There were two main issues that needed to fit within the same lender’s criteria.
Two properties on one title
The first challenge was finding a lender that could accept two properties held under one title.
Mortgage lenders have their own rules around how properties must be registered and structured. A straightforward buy-to-let property will often involve one property on one legal title, an arrangement involving two properties on the same title can reduce the number of lenders prepared to consider the application. A few lenders can consider multi-units, however these are generally houses or blocks that have been split into flats.
The important point was not simply whether the properties could generate rental income. The lender also needed to be comfortable taking security over the particular title structure.
We therefore needed to focus on lenders whose buy-to-let criteria allowed this type of arrangement.
Remortgaging from a bridging loan
Our customer was also looking to refinance existing bridging finance.
Bridging loans are generally used as shorter-term finance. Moving from a bridge onto a standard buy-to-let mortgage can provide a longer-term funding solution, but lenders can have different rules around accepting a remortgage where the existing borrowing is bridging finance.
In this case, the properties were new builds, so we needed a lender that could consider the remortgage out of the bridging loan in those circumstances.
This meant that finding a lender willing to accept two properties on one title was only part of the solution. The same lender also had to be comfortable with the source of the existing finance and the move onto a longer-term buy-to-let mortgage.
What We Did
We reviewed the structure of the case before looking at suitable buy-to-let remortgage options.
The key issue was identifying lenders that could consider two properties on a single title. This allowed us to avoid options that may have appeared suitable based on the loan amount and loan-to-value but would not have accepted the property arrangement itself.
We then checked whether those lenders could also consider refinancing an existing bridging loan on the new build properties.
Both requirements needed to work together.
A lender might have been comfortable with a remortgage from bridging finance but required each property to have its own title. Another could potentially accept the title arrangement but have different rules around refinancing the existing bridge.
We therefore focused on finding one lender that could accommodate:
- Two properties held on one title
- A buy-to-let remortgage
- Refinancing of the existing bridging loan
- The new build properties
- The required mortgage of £580,000
The Solution
The lender we identified was able to accept the two properties being held on one title and was also comfortable with the remortgage being used to repay the existing bridging finance.
This allowed our customer to move away from the short-term bridging arrangement and onto a longer-term buy-to-let mortgage.
The mortgage arranged was:
- Property value: £800,000
- Mortgage amount: £580,000
- Loan-to-value: 72.5%
- Mortgage term: 30 years
- Mortgage type: Buy-to-let remortgage
- Initial product: 5-year fixed rate
The product secured was available for this particular customer at the time. Mortgage products and lender criteria can change, so the options available to another landlord in similar circumstances may be different.
Why the Solution Worked
The lender’s criteria matched both of the main challenges rather than dealing with only one part of the case.
In particular:
- The lender could accept two properties on one legal title.
- The lender could consider a buy-to-let remortgage from existing bridging finance.
- The new build properties could be considered within the application.
- The required £580,000 mortgage was achievable against the £800,000 property value.
- The 30-year term provided the longer-term buy-to-let funding our customer was looking for.
This combination was important because a lender that accepted the loan amount but not the property structure would not have provided a workable solution.
The Result
We successfully arranged the £580,000 BTL remortgage our customer needed for the properties in Dorset.
The new mortgage was arranged over 30 years on a 5-year fixed product, allowing the existing bridging loan to be refinanced onto cheaper longer-term buy-to-let finance.
Most importantly, the lender was comfortable with the two properties being held on one title as well as the fact that the mortgage was refinancing bridging finance used in connection with the new build properties.
Our customer was very happy with the service and went on to recommend Kerr & Watson to friends.
What This Case Shows
This case shows why a buy-to-let remortgage can require more detailed lender research when the property does not follow a standard structure.
Having two properties on one title or needing to refinance a bridging loan does not necessarily mean a buy-to-let mortgage cannot be arranged. However, lenders can take different approaches to both issues.
For landlords moving from bridging finance onto a longer-term mortgage, the important part is finding a lender whose criteria work with the property, title arrangement, loan amount and reason for the remortgage at the same time.
A case that falls outside one lender’s criteria may therefore be acceptable to another lender that takes a different approach.
Need Help Refinancing a Buy-to-Let Bridging Loan?
If you have used bridging finance for a property purchase or development and now want to move onto a longer-term buy-to-let mortgage, Kerr & Watson can review your circumstances and look at suitable buy-to-let remortgage options.
We can also help where the property has a less standard arrangement, such as multiple properties on one title. Contact Kerr & Watson to discuss your buy-to-let remortgage and the lender options that may be available for your circumstances.
