Background
A portfolio landlord approached Propp, the specialist finance comparison site to purchase a detached property for £850k next to Manchester airport to convert into a property for short-term lets for airport stays.
The client had a portfolio of buy-to-lets but was looking to move into the short-term let market due to the higher yield these properties provide, against a backdrop of an increasingly challenging regulatory environment in the buy-to-let market.
Challenge
There were time challenges to overcome because the client was raising the deposit by refinancing three buy-to-lets with her previous lender which didn’t complete in time due to legal complications. The hold-up meant that the offered rate expired, potentially resulting in much higher interest costs which would have made the gross LTV unviable.
Solution
We were able to offer flexibility by offering a lower rate than the new higher rate would have been. Offering 0.88% instead of the 0.95% it would have been post-expiry.
We offered a term of 12 months to give the borrower time to complete the work and refinance onto a longer-term product.
Outcome
We completed the bridging loan, enabling the client to move forward with the project that has a forecast value of £975k after works, and forecast rental income of £100-£120k. The property also presents further opportunity in the future for airport parking, and additional short-term lets.
The success of this purchase, despite the challenges faced takes the client one step closer to achieving their goal of creating a life-long income from property.
Abbie Dickson-Davies
