As someone who’s worked in mortgages for most of my career, I love watching those programmes where someone buys an under-value property, does some often quite basic improvement works to make it habitable and then earns a steady income by renting it out after the work is completed.
So, you can imagine how excited I was when CHL Mortgages announced we were launching a light refurbishment range which is designed to help landlords finance the purchase of a buy-to-let property and then undertake non-structural or modernisation works to maximise the rental yield and increase its capital value.
Traditionally, landlords have had to follow a two-step approach to fund the purchase and the refurbishment works by taking out a bridging loan and then finding a long-term buy-to-let product to exit onto. While this method does have its advantages – a bridging loan can give landlords quick access to cash for when time is of the essence, say when purchasing a property at auction, for example – it can lead to uncertainty when it comes to finding a long-term buy-to-let exit. Light refurbishment gives brokers and borrowers another route to achieve their property goals. By combining the purchase and refurbishment funding into a single long-term retention-based product, borrowers benefit from one legal process and one set of legal fees, helping to reduce costs and simplify the journey. It also provides greater certainty around the release of refurbishment funds, making the process more predicable from the outset. Most importantly, it gives brokers more flexibility when advising clients, allowing them to recommend the approach that best fits the circumstances of each case.
How does light refurbishment work?
Light refurbishment is a buy-to-let term mortgage solution designed for works that don’t require building regulations approval and which can be signed off under the Competent Person scheme. These works can include things such as installing a new bathroom or kitchen; replacing fixtures and fittings, windows and doors, and roof coverings; undertaking a full rewiring; and converting a C3 dwelling to a C4 HMO property.
The initial mortgage advance is based on the pre-works rental and market valuation figures, with a retention held based on the difference between the pre- and post-works values. Once the borrower confirms the works are completed, a reinspection is instructed to confirm the actual post-works rental and market value figures. Following receipt of the reinspection approval, we complete a few final checks and then the retention funds are released.
Our new range is designed to help landlords unlock the potential in their properties.
It features 2 and 5 year fixed rates up to 75% LTV which are available to individual and limited company/LLP landlords with a choice of fee options.
For landlords wanting the flexibility of a shorter-term product, our 2 year fixed rates start from 4.40% for single dwelling properties and 4.50% for HMO and MUFB properties with up to six bedrooms or units.
For landlords looking to lock in for a longer period of time, our 5 year fixed rates start from 6.11% for single dwelling properties and 6.21% for HMO and MUFB properties with up to six bedrooms or units.
Interested? You can find out full details on our website by taking a look at our product page.
Don’t forget, when you place a case with CHL Mortgages, we’re here with you every step of the way. Our business development managers will work closely with you to help you with your case before submission, and you’ll receive support from our underwriters as they progress. If you’ve got a question about light refurbishment, get in touch with your business development manager today. Alternatively, call us on 01252 365888 or email sales@chlmortgages.co.uk.
CHL Mortgages unveils new light refurbishment buy to let range