We often receive enquiries for this, after the case has gone wrong and has cost the customer money! Not good.
With buy to let refurbishment projects this situation can easily be avoided if a few of the right questions are asked upfront.
At Enhanced Wealth Ltd we like to ask questions and the one that we ask for every buy to let mortgage case is “The target property, is it in lettable condition and able to produce rent from day one?”
If the property is not lettable, a standard buy to let mortgage product application will fail, because the property valuer will be unable to recommend it as security.
If you come to us and we find out that the target property is a “do up”, no problem there are finance solutions available. New Kitchens, bathrooms, decorating and generally tired properties can be catered for without the need for the more expensive bridging finance.
If you intend to hold on to the property, why take out a bridging loan when you could go straight to term, avoiding the extra cost?
Here is the structure of a recently completed refurb deal, just to bring it to life for you:
Purchase price of property: £375,000
Estimated end value: £420,000
Day one advance for purchase 75% of current value: £281,250 less
Retention until works completed: £27,000
Total advance required 75% of end value: £315,000
Now we think that it’s fair to manage our potential customer’s expectations upfront. This product won’t accept structural work, conversions, or work that represents more than about 15% of the day one value.