A landlord in Essex wanted to buy another rental property but had no cash deposit. We arranged a £900,000 bridging loan secured on the new property and two of their existing rentals. It covered 100% of the purchase price and completed in 1 week.
At a glance
| Loan type | Bridging loan secured on more than one property |
|---|---|
| Purpose | Buy another rental property with no cash deposit |
| Loan size | £900,000 |
| Funding | 100% of the purchase price |
| Security | The new property plus 2 of the client’s existing rental properties |
| Area | Essex |
| Exit | Refinance onto a buy-to-let mortgage |
| Time to complete | 1 week |
The client
Our client was a landlord with 2 rental properties who wanted to add another to their portfolio. Most of their money was tied up as equity in the properties they already owned, so there was no cash deposit to hand.
The challenge
A buy-to-let mortgage usually needs a deposit of around 25% of the price. Raising that by selling or re-mortgaging an existing property would have taken months and cost money. The purchase wouldn’t wait that long.
What we did
A bridging lender can take security over more than one property. We arranged a loan secured on the new property and on 2 of the client’s existing rentals.
With that extra security, the loan could cover 100% of the purchase price. The client didn’t need to put in any cash of their own to buy.
The outcome
The purchase completed in 1 week, using equity the client already had instead of cash. The bridging loan is repaid by refinancing onto a buy-to-let mortgage.
Questions people ask
Can I get 100% finance to buy a rental property?
Yes, if you own other property with enough equity. A bridging lender can take extra security over it, so the loan covers the full price.
What happens to the properties I use as extra security?
They are at risk too. If the bridging loan isn’t repaid, the lender can look to any of the properties it is secured on. That’s why the exit has to be planned before you start.
How McDowell can help
We’re a Northern Ireland based broker with over 30 years’ experience, arranging bridging finance across the UK. If your money is tied up in your portfolio, we can look at whether its equity could fund your next purchase. Find out more about bridging loans, or book a free call below.
Our case studies are anonymised. We leave out anything that could identify a client, their property or their business. Every case is different, and lenders decide each application on its own merits.
Some bridging loans are not regulated by the Financial Conduct Authority. Your property may be repossessed if you do not keep up repayments on a loan secured on it. If other properties are used as extra security, they are at risk too.
McDowell Financial Services Ltd is authorised and regulated by the Financial Conduct Authority, FRN 800988.
This article is general information only and isn't personal advice. Mortgage and protection products depend on your circumstances, so please speak to one of our advisers before making a decision.
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