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Bridging loan saves buy-to-let landlord’s business

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A £56,000 bridging loan was recently provided to prevent a buy-to-let landlord losing his property portfolio, reported in November 2017.

The landlord had significant mortgage arrears that meant his properties were in danger of being repossessed. His ground rent and service charges were also overdue, and he relied on his rents as his main source of income, leaving him in a position where his livelihood was threatened.

A £56,000 bridging loan at a 55% loan to value rate was provided and completed in just five days. This allowed the landlord to clear his debts and gave him time to sell two properties that enabled him to pay off the bridging loan and free up extra cash.

Though lenders are cautious about lending to borrowers who are in financial difficulties or have a bad credit history, this case does show that bridging lenders are prepared to look at individual circumstances. Their main concern is that the exit strategy is sound. In the case of this landlord, the property used as security for the loan was sufficient to cover any risk of the loan defaulting. He also had other properties that could be sold within a reasonable time frame to repay the loan.

Landlords have faced increased costs from higher stamp duty and cuts to tax relief. Landlords finding themselves in financial difficulty can seek advice from a bridging finance broker who may be able to find a short-term bridging loan that can provide breathing space to restructure their business.