Bridge-to-let: buy and refurbish now, refinance later, one lender or two.
The standard buy-refurbish-refinance play. A bridge funds the purchase and works, a buy-to-let or HMO mortgage at the new value repays it. Some lenders do both halves and agree the exit up front.
The two ways to do it
Two lenders. A bridging lender funds the purchase and works. When the property is finished and let, you apply to a buy-to-let lender for a term mortgage at the new value. Most flexible, usually cheapest on the bridge, but the refinance is not guaranteed and the timing gap can bite.
One lender (true bridge-to-let). A lender that offers both products underwrites the exit mortgage at the outset and issues a decision in principle alongside the bridge. When the works are done, the same lender switches you on to the term loan, often with reduced fees and no second valuation. Slightly more expensive on the bridge, but the exit is agreed before you start. For first and second projects this certainty is worth a lot.
What the exit mortgage needs
- The rent covers the interest. BTL lenders stress-test rent at 125% to 145% of the interest at a notional rate. A £560,000 property producing £2,600 a month may not support a 75% mortgage; work the numbers before you buy.
- Six months' ownership. Many term lenders will not refinance at the new value until you have owned the property for six months. Some will, at the uplifted value, from day one if the works are evidenced. This decides your bridge term.
- Personal income and credit. The bridge does not care much; the BTL lender does. If the refinance would fail on your income, the bridge fails too.
- HMO licensing. For HMO exits, the licence (or evidence it will be granted) is needed before the term lender will complete.
Typical numbers
Bridge: up to 75% of purchase, works funded by you or through a facility, 0.6% to 0.95% per month, 6 to 12 months. Exit: BTL or HMO mortgage at up to 75% of the new value. The deal works when 75% of the new value repays the bridge, the retained interest and the fees, and leaves your deposit in the property doing its job.
Ownership structure
Most investors now buy through a limited company or SPV for tax reasons. Both bridging and BTL lenders are comfortable with this; expect personal guarantees from directors. Read our guide to borrowing through a company.
About the numbers on this page. Rates, fees and loan-to-values are typical market ranges for unregulated bridging in England, given so you can size a deal. They are not an offer. Your terms depend on the property, the exit, the lender and you.
Questions we get asked
Will the same lender definitely give me the exit mortgage?
With a true bridge-to-let product the exit is underwritten at the start and confirmed subject to the works being done and the property valuing up. It is as close to certain as lending gets, but it is still subject to the end valuation and to nothing material changing about you.
What about the six-month rule?
Some BTL lenders will not lend at the new value until you have owned for six months. Others will, if the works and costs are evidenced. If your bridge term is short, we go to the ones that will.
Can I do this on an HMO?
Yes. The bridge funds purchase and conversion; the exit is an HMO mortgage. Licensing and Article 4 restrictions need checking before purchase, because they can kill the exit.
What if the property does not value up?
You refinance at a lower LTV and leave more money in, or you sell. This is the main risk in the strategy and why lenders and we stress the end value before you buy. Buy at the right price and the risk is small.
Tell us the deal.
A few numbers and a postcode is enough for a first view. Indicative terms cost nothing and commit you to nothing.