If you are a landlord with a well-managed portfolio of multiple properties, then surely, you know that it is an entirely different game of chance than just having one or two buy-to-let.
In fact, you are going to be juggling tenants, mortgages that are about to be renewed, refurbs that are running, and new deals that are popping up. What you really need is not necessarily six weeks later, but flexible money that comes into your account instantly when you require it.
Isn’t it about time you got into bridging? It has literally become a rescue tool for guys and girls who have a proper portfolio. Want to move quickly, get a great deal, take equity out, or organize the whole lot into a company structure? Bridging is your friend.
Why We All End Up Using It
Managing a portfolio is really tough. You have different mortgage end dates, tenants of all sorts, and deals that come out of nowhere. Bridging just fixes you up:
- Money in your account within a few days, not months
- They focus on the property rather than your income or rent
- They are not strict in terms of the property type
- Just right for a heavy refurbishment or a house conversion into an HMO
- Delays you when the mortgage for the long-term is not ready yet
In short, you are not allowed to play dumb waiting for a high-street bank to come to a decision.
Striking Before The Deal Vanishes
Every one of us has seen it – a house being sold at a throwaway price at an auction, an off-market property that is a complete steal, a tenanted property portfolio being sold at a rapid rate or a person who just wants to make a quick sale. If you doze off, the opportunity slips through your fingers. Bridging helps you to be the one who makes the offer with the cash and thus, the seller gets the certainty that he needs. It’s amazing that I have seen people who were able to bridging lender moves faster than the cash buyers!
Extracting Equity Without Remortgaging the Whole Portfolio
You may have a few hundred thousand (or a million) equity in total across the portfolio but the usual way of getting it is a real horror story. Bridging helps you open the lock in one go. Some lenders can require one property as collateral, some allow you to cross-charge several of them, or even give you one big facility against the whole portfolio. There goes the money into your hand for the next purchase or a huge refurb, and your nice cheap long-term mortgages remain exactly where they are.
Fixing the Structure
Eventually, you will decide to shove everything into a limited company, or consolidate a bunch of old mortgages that are not good for you, or get ready for when the bank will wake up. Bridging is great for that middle part:
- Buying time while you move stuff into a company
- Funding refurbs and making the properties mortgageable again
- Allowing you to sell a few without the whole pack dropping
- Supporting you while the long-term finance is catching up
It’s temporary, so you are not stuck with it for 25 years.
Refurbs and Conversions
If you want to remove the old kitchens, knock down a few walls, turn a three-bedroom into a six-bedroom HMO, or just raise the EPC from an E to a C so that you are not fined, bridging has got you covered – and many lenders will pay it out in stages as the builders finish each part. Total game-changer.
When the Usual Mortgage Is Taking Too Long
Portfolio mortgage applications these days? It could take months. Bridging just keeps everything going – you can still purchase the next property or proceed with the works while the bank is hesitating.
Cross-Charging for the Big Moves
Put a bunch of properties together as security for one loan and all of a sudden, you can borrow real money, purchase an entire street or a block of flats, and negotiate better rates because the deal is bigger.
Covering Voids and Quiet Periods
Is it that a couple of your properties are empty while you are doing them up, or has a tenant done a runner? Bridging does not care if rent has stopped for a while – it is all about the value of the asset, so you should not be panicking about cashflow for a few months.
Buying Retiring Landlords’ Portfolios
A long-time landlord is retiring and wants to sell 15 houses in one go? You will need to move fast and look solid. Bridging will give you the power to vacuum the whole lot up, sort the tenancies and refurbs, and then put long-term mortgages on later when everything is neat and tidy.
How You Get Out of It
Bridging is temporary, so you need a solid plan:
- Refinance with standard buy-to-let mortgages
- After tidying them up, sell a few
- Do a big portfolio mortgage when it’s all in a company
- Quick flip after adding value
Lenders are always interested in seeing your exit plan before they give you the money – quite understandable.
The Risks (Let’s Not Be Daft)
It’s great, but it’s not cheap and things can go awry:
- Market declines and your equity becomes thinner
- An over-budget refurb or it taking longer than expected
- The long-term financing falling through
- More voids than you had accounted for
- If you’re not on the ball, interest accumulates quickly
Work out your numbers properly, have a solid Plan B, and it’ll be fine.
Last thoughts
In today’s world, with a decent portfolio, bridging finance is only one of the options you have at your disposal. It allows you to have the velocity and the movement to seize the good things, follow the progress, take care of the organisation, and not be left behind just because the high-street banks are slow. If you use it prudently, have a very clear exit plan, then it will be the instrument that assists you in creating something really great all over the UK.