Time is of the essence in the buy-to-let (BTL) market, where the ability to move quickly, and deftly, is a must. With mortgage rates currently changing on a daily basis, helping landlords and investors swiftly secure funding to purchase additional property and grow their portfolios remains a top priority.
This is especially true in the current economic climate where a growing number of accidental and smaller scale landlords are choosing to sell up and leave the market due to higher mortgage costs, increased taxes and future uncertainty about forthcoming legislation, such as the Energy Performance Certification requirements in 2025.
As a result, many professional landlords and large-scale property investors are looking to capitalise on the opportunities offered by those exiting the market by quickly snapping up properties to renovate and rent out in order to improve their yields.
In the higher interest rate environment, ensuring these clients secure the best possible outcome for their individual circumstances is essential. Many landlords and investors may find their borrowing capacity has reduced significantly over the last couple of years, which can cause them to encounter difficulty when trying to secure the funding they need.
This means brokers are having to work harder than ever to ensure their clients are not only getting the most suitable product for their individual circumstances, but also ensure they are maximising their client’s borrowing potential by exploring every option available in the market.
While it is certainly true that taking out a bridging loan is one of the quickest and easiest ways for landlords and investors to quickly raise capital in a rapidly moving market, remortgaging onto a commercial BTL product can also prove to be an efficient and cost-effective way to swiftly secure funds.
For example, Clever Lending was recently approached by a broker with a BTL client looking to capital raise and expand their property portfolio. The client was looking to raise money from unencumbered property to purchase another property as part of their long-term investment plan and needed a quick turnaround.
Following an AVM that valued the client’s current property at £185,000, Clever advised the client to remortgage onto a commercial BTL product with Together worth £102,127 at a rate of 7.99%. The mortgage was fixed for five years and had an LTV of 55%.
The turnaround time on the case was four days from submission to offer and another four days to completion. Conducting a valuation of the existing portfolio electronically helped to speed up the process significantly and meant the client could borrow the funding they needed to buy another investment property within the tight timeframe.
The success of the application and the speed at which the funds were released was crucial in helping the client achieve their goal and demonstrates the availability of alternative lending solutions to bridging loans when trying to access swift capital raising solutions.
In this particular situation, remortgaging was the best option for this client as it enabled them to quickly achieve the required level of capital to buy another property and reinvest in their portfolio. It also enabled them to borrow the money at a rate they could comfortably afford.
As this case clearly demonstrates, remortgaging should always be considered in cases where capital raising is required, particularly as it is not always the lengthy process many in the industry may consider it to be.
This is an important consideration for brokers to take into account when searching for quick capital raising lending solutions, particularly in the current ever-changing market, where exploring every avenue is vital to successfully meeting the borrowing requirements of their clients.
Any broker unfamiliar with the commercial BTL sector can refer their clients to master brokers such as Clever Lending to carry out the work on their behalf. This will allow them to focus on other areas of the market where they feel most comfortable safe in the knowledge that the needs of their more complex clients are being met.
Steve Sanderson is commercial and bridging specialist at Clever Lending