Mortgage vs. Bridging Loan for Flip

[Lucy Jamieson]

Hey guys,

I'm looking to do my first flip up in Leeds on a property between the £80k - £100k mark. I have approx £25k cash for deposit, fees and renovation but I'm just a bit unsure which route to go down re: financing. I want to try and get this flip down as quick as possible (within 2/3 months) so I'm not sure if this will affect how I finance the flip.

Bearing the above in mind is there a clear route to go (mortgage or bridging loan)? 

Would really appreciate any advice anyone experienced can give on this! I know lenders don't like loaning to people flipping, but I've read you can work round this. I'm new to this and don't want to make any big mistakes!

Thanks so much guys!

[Simon Allen]

Hi Lucy

A very common question and there is no legal way around a mortgage for a flip. It's bridging or cash. If you use a mortgage it's mortgage fraud and you risk being blacklisted by the lender which will mean no more credit.                                                                                     

It's difficult to comment on your numbers as you don't mention the refurb costs but my initial feeling as a landlord and broker is you need more money. On a £80k purchase you would need a £30k deposit and funds to cover lender's interest and fees up 20 12 months which is another £7k plus legals, refurb etc.

[Lucy Jamieson]

Thanks so much Simon, from my research I thought this may be the case. And I also agree with the amount of money I have.

Bearing in mind the amount of money I have to spend, do you think getting a mortgage on a property, renting it out for a year/18 months and then selling it on would be more doable? I can of course raise more funds but this would take a while, and would like to get moving.

Thanks,

Lucy

 

[Wesley Davidson]

Hi Lucy,

 

You need a refurbishment product which allows you to borrow funds to buy the property and also lends you the funds for the works. There are several lenders that can work based on the figures quoted. Drop me an email and let's chat later today and see if we can find you a solution.

Thanks,

Wes.

Wesley@foxdavidson.co.uk