• Broker
    The information contained in this area of our website is for FCA regulated brokers only and not intended for consumer usage.
  • Consumer


Special feature, written by Roger Morris at Precise Mortgages

It’s no secret that landlords have faced several challenges in recent years.


A raft of regulatory and taxation changes and a generally flat housing market, coupled with uncertainty around Brexit, has led to many potential new investors looking at the market and deciding it’s not for them. We could also see more existing landlords deciding to exit the market as the full effect of the taxation changes becomes apparent and yields are squeezed.


However, the idea of investing in property and building a portfolio of properties still appeals to many people who have more faith in bricks and mortar (with correctly structured ownership) than in other investment vehicles.


If you’re approached by a customer who’s looking to invest in a buy to let property for the first time or an experienced landlord wanting to develop their portfolio, but who doesn’t have the liquid capital to fund a deposit and/or the higher stamp duty costs, did you know a Second Charge Mortgage or Bridging Finance could be a viable option?


In the past there was a misconception that Second Charge Mortgages were only for customers with adverse credit or those looking to consolidate debt. Whilst it’s true that they can be used by customers with less than perfect credit profiles, loans can also be used by borrowers who need to raise funds quickly, want to protect an existing first charge rate or want to avoid the early repayment charges that a remortgage could incur.


A Residential Second Charge Mortgage could be an ideal solution for customers looking to raise capital for the purpose of starting, or growing an existing, property portfolio by releasing existing equity in their current residential property or even an existing investment property.


Customers could use a combination of specialist lending products to take their first step into property investment, for example by applying for a Second Charge Mortgage on their residential property whilst their mortgage broker simultaneously arranges a buy to let mortgage product. This allows customers to acquire the investment property without committing liquid capital towards the transaction.


Second Charge Mortgages can also be used for other types of property investment, such as capital raising to acquire land, purchasing holiday homes or funding the conversion of existing rental properties to Houses in Multiple Occupation.


Bridging Finance could be the answer for customers who need a flexible short-term borrowing solution, want to renovate a property before selling on, are looking to buy a property at auction or are in the process of buying a new home while waiting for the current one to sell.


Bridging Finance is used to ‘bridge’ a gap, until longer-term finance can be arranged or the underlying security is sold. There are two types of finance available: regulated and unregulated. Regulated loans are those on a property being lived in or going to be lived in. Unregulated loans are useful for corporate entities (i.e. limited companies) or properties that are not going to be lived in by the borrower or a member of their family. Unregulated loans are for those who own property solely for business purposes, e.g. limited companies, professional landlords, property investors and so on.


If your customer is one of the growing number of investors who are turning their attentions towards properties requiring quick access to Bridging Finance to complete light refurbishment to get them to a lettable standard, Precise Mortgages’ new Refurbishment Buy to Let proposition could be the answer.


With challenges around taxation and yield pressure, more customers are looking at these type of properties because of the potential for higher yields, as well as capital appreciation.

For further peace of mind, Refurbishment Buy to Let gives customers the best of both worlds – flexible Bridging Finance which enables a property requiring refurbishment to be purchased together with the surety of an exit onto a long-term buy to let mortgage, raising up to 80% of the after-works valuation, once the work has been completed – releasing capital for future projects.


In the past, these type of investors may have problems finding a lender prepared to provide them with the finance they need, as the high street has not historically catered for them – this is where a specialist lender and a knowledgeable broker can help.


Specialist lenders, like Precise Mortgages, are dedicated to designing alternative solutions to customers who are underserved by the high street. Personally, I love working with our master broker partners who are highly experienced at identifying specialist opportunities and handling the intricacies of these cases, with the ultimate aim of helping customers realise their buy to let aspirations.