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cashinmattress

More Buy-To-Let Borrowers Turning To Bridging

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More and more buy-to-let borrowers are turning to bridging loans because they are being shut out by high street lenders.

In a survey of 350 mortgage brokers carried out by peer-to-peer bridging lender West One Loans, a record 36% of intermediaries listed buy-to-let as the most popular use for bridging loans.

This has increased dramatically from just 23% when they were asked the same question in August last year.

Duncan Kreeger, director at West One Loans, said: “A generation of renters are demanding somewhere to live – and a growing army of landlords need loans to make the required investments.

“The latest sky-high rental figures demonstrate that hunger for more investment, but cash-strapped banks are still hesitant to make a serious commitment.

“The supposed upturn in traditional lending isn’t meeting this need.”

According to intermediaries, the bridging industry as a whole has grown 49% over the last year.

This article is out to lunch.

'Cash strapped banks'? Haha. That's a good one.

However, seeing the big banks failing to lend to the BTL brigade perhaps is hinting at their reluctance to take a punt on what is in fact a nag.

And when it all goes south, probably not too far away, who picks up the bill for the feckless once again?

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why would a BTL need a bridging loan...bridging what circumstance in normal business?....they borrow, they buy...

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Great news! I think things are actually turning, for the first time this year my friend that works in prime z1 says that lettings have fallen off a cliff and landlords are having to reduce prices.

z1? Where is or what is that?

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z1? Where is or what is that?

London public transport fare Zone 1 i.e. everything inside the circle line (inclusive) and a few bits south of the river (Waterloo and London Bridge.

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..///....

..... perhaps is hinting at their reluctance to take a punt on what is in fact a nag.

And when it all goes south, probably not too far away, who picks up the bill for the feckless once again?

;):P:P

11/10

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The profit in BTL has to be tiny if you factor out HPI, it's hard to see how the bulk of them can service the loans over the long term. It only appears to work if prices keep going up, so you can justify higher rents.

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A friend of mine who has a portfolio of property bought from the mid 60's to middle of the 90's in London told me that he could no longer get bank financing because the banks now have a blanket rule that they will not grant new loans to anyone over 65(I suspect he had IO loans on alot of the property) So he has had to go for bridging finance, which is expensive because he has a very high LTV ratio (he's transfered alot of property to his children without mortgages). So the increase in bridging loans may well not be a positive thing ..

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The profit in BTL has to be tiny if you factor out HPI, it's hard to see how the bulk of them can service the loans over the long term. It only appears to work if prices keep going up, so you can justify higher rents.

Yep. Plenty "landlords" will now be wishing they hadn`t bothered.

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..because it was all based on HB levels?

Rents don't have to be based on HB levels directly, however with HB propping up rents at the bottom of the market, even the middle and the top of the market get effected.

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A friend of mine who has a portfolio of property bought from the mid 60's to middle of the 90's in London told me that he could no longer get bank financing because the banks now have a blanket rule that they will not grant new loans to anyone over 65(I suspect he had IO loans on alot of the property) So he has had to go for bridging finance, which is expensive because he has a very high LTV ratio (he's transfered alot of property to his children without mortgages). So the increase in bridging loans may well not be a positive thing ..

Thanks, I suspect this might be due to equity or apparent lack off!

Presumably he transferred some of the properties to the kids as a IHT avoidance mechanism but is he still getting the rental income from the BTLs in which case the higher cost of bridging finance averaged out over the whole portfolio equity will be less nuts.

Edited by koala_bear

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A friend of mine who has a portfolio of property bought from the mid 60's to middle of the 90's in London told me that he could no longer get bank financing because the banks now have a blanket rule that they will not grant new loans to anyone over 65(I suspect he had IO loans on alot of the property) So he has had to go for bridging finance, which is expensive because he has a very high LTV ratio (he's transfered alot of property to his children without mortgages). So the increase in bridging loans may well not be a positive thing ..

He needs to sell up.

There is no blanket rule on loans to over 65s....

course, the shame, the shame, of NOT being a property magnate.

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Thanks, I suspect this might be due to equity or apparent lack off!

Presumably he transferred some of the properties to the kids as a IHT avoidance mechanism but is he still getting the rental income from the BTLs in which case the higher cost of bridging finance averaged out over the whole portfolio equity will be less nuts.

Others might not be getting it across all their properties, and are just desperately trying to keep paddling until the government "does something"?

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Others might not be getting it across all their properties, and are just desperately trying to keep paddling until the government "does something"?

Another thought, buy a wreck (using a bridging loan) then do up and and get a BTL mortgage for a bigger amount after it is done up?

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  • 244 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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