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Use bridging to penetrate BTL market – Precise

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  • 02/12/2011
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Use bridging to penetrate BTL market – Precise
Precise mortgages said using bridging finance to buy un-mortgage-able property and renovating is one way to get strong returns from the buy-to-let market.

Speaking at a Mortgage Solutions Breakfast Briefing, Alan Cleary, managing director at Precise suggested establishing working relationships with lettings agents and auction houses would help brokers generate leads to find this kind of buy-to-let business.

Brokers should approach letting agents in rental hot spots, said Cleary, and offer their services. Cleary explained how landlords can enlist the equity in other parts of their portfolio to buy refurbishment properties.

The example on his slide suggested a £400,000 property at 60% Loan to Value (LTV) can be used to buy a £200,000 property at 75% LTV, with a £50,000 deposit extracted from the equity.

The figures suggested remortgaging after a six-month period investors could turn a £70,000 profit, as long as the property sells.

Brokers need to think about fostering closer relationships with auction houses and their clients by attending property sales to generate leads, he said.
“We can turn around finance ahead of auction sales very quickly,” added Cleary.

Accountants and book keepers are another good client bank to explore to establish reciprocal referral relationships, he added, as bridging can be used to pay HMRC bills, then remortgaged on later.

He said: “In the current economic climate, a lot of people will struggle to pay tax bills in 2012.”

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