In this case study, we highlight how we helped a couple secure a bridging loan to purchase a buy-to-let property, complete necessary refurbishments, and ultimately refinance on a long-term buy to let mortgage.
The Challenge
Our clients, a couple in their early 40s, owned their primary residence in Manchester with a small mortgage outstanding. They had recently identified an excellent investment opportunity—a buy-to-let property in Birmingham priced at £175,000. They planned to refurbish the property and rent it out for a steady income stream.
To complete the necessary works, they estimated an additional cost of £25,000, bringing their total required funding to £200,000. Their strategy was to refinance onto a standard buy-to-let mortgage after the refurbishment was complete.
Time was a critical factor, as they didn’t want to miss out on the property. However, traditional mortgage options were too slow, especially considering the state of the property – it would need works completing before being eligible for a BTL mortgage – and the couple needed a financial solution that would allow them to act quickly.
Our Solution
We began by explaining how bridging finance could support both the purchase and refurbishment of the property.
Since the couple required additional funds for the renovation, we advised on how this would affect their loan-to-value (LTV) ratio. By including the refurbishment costs in the total loan, their LTV increased, but it remained within acceptable limits for bridging lenders.
To strengthen their application, we leveraged our expertise in buy-to-let mortgages. We worked with the couple to secure an Agreement in Principle (AIP) from a mortgage lender, which provided reassurance to the bridging lender about the exit strategy.
This demonstrated that the couple had a clear, viable plan to refinance onto a long-term buy-to-let mortgage once the refurbishment was complete.
Throughout the process, we provided detailed advice on every step—from how the bridging loan would be structured, to what each cost entailed, and how repayment would work with the mortgage coming through. We ensured that they understood the implications of borrowing for refurbishment, the impact on their LTV, and the timeline for refinancing.
As specialists who work with buy-to-let mortgages daily, we were able to offer comprehensive support beyond just securing the bridging loan. We guided the couple on the broader financial strategy, and our hands-on approach and clear communication gave them the confidence to proceed.
The Outcome
Thanks to our responsive and transparent service, the couple successfully acquired and refurbished the property without delays. They refinanced onto a buy-to-let mortgage at a favourable rate, and within a few weeks of completion, they had tenants in place generating rental income.
The bridging loan was repaid after 10 months, minimising their interest costs, and our fee-free advisory service saved them additional expenses.
The Costs
Our client borrowed £200k: £175k for the purchase price and £25k for the renovations.
With the property currently valued at £175k and their own property valued at £350k, their loan-to-value came to 68% (after deducting their outstanding mortgage of £140k).
Being under the 70% LTV threshold kept their interest rate relatively low at 0.73% per month.
Repaying the loan after 10 months, the clients paid £18,316 in interest, and roughly £3,300 in additional fees and costs, taking their total cost to just over £20,000 – easily surpassed by their potential profit margin from increasing the value of the property and generating the ongoing rental income.
If you’re considering a bridging loan, contact us today for a free, no-obligation consultation. Our expert team is ready to guide you through the process and help you achieve your property goals.