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Bridging Finance

The ongoing challenge for many property investors and landlords, particularly those with more than ten properties in their rental portfolio, is getting access to mortgage finance as most mainstream buy to let lenders now have a rule of not offering further lending to portfolio landlords. BM Solutions, part of the Lloyds Group, and previously one of the main buy to let specialist lenders will now only lend to those who have no more than three properties, thereby excluding many of their existing customers. Many property investor-landlords are understandably frustrated with this situation, particularly those with decent equity levels across their portfolio and who are also enjoying very healthy net rental returns at present due to very low bank base rates.

Commercial lending is one option for longer term loans, but for those looking to take advantage of bargain buy opportunities, the use of short term bridging finance is an alternative option which is being utilised by more investors these days, particularly for properties which require refurbishment.

According to Emma Hodson, head of marketing at Bridgebank Capital, the use of bridging finance is primarily being considered by their investor clients to enhance the value of a property and to secure a new tenant, prior to financing the property on a long term mortgage.

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