A recent development in the buy-to-let sector has emerged as Somo, a specialist lender, has introduced a bridging finance solution that enables investors to secure properties below market value. This innovative approach allows landlords to capitalize on unique purchasing opportunities, particularly in situations where sellers are motivated to sell quickly.
TL;DR: Somo’s bridging finance enabled a £500,000 property purchase for just £350,000; this opportunity is significant for landlords seeking below-market buy-to-let investments.
How Does Somo’s Bridging Finance Work for Buy-to-Let?
Somo structured a facility against the borrower’s main residence, facilitating the purchase of a property valued at £500,000, which was acquired for £350,000. The seller, needing a quick sale due to relocation overseas, accepted a discounted price. An independent valuation confirmed the property’s market value, assuring Somo that the discount was due to the seller’s circumstances, not the asset’s condition.
What Are the Benefits for Landlords in Buy-to-Let?
This type of financing creates significant equity from day one, allowing landlords to establish a robust foundation for their investment. By using Somo’s second charge product, the borrower cleared existing mortgage arrears and released enough capital to fund the purchase. This strategy not only secures the property at a lower price but also sets the stage for refinancing onto a long-term buy-to-let mortgage.
What This Means for Buy-to-Let Investors
For landlords and property investors, this approach opens doors to below-market buy-to-let opportunities, particularly in a competitive market. The ability to purchase properties quickly and at a reduced price can enhance investment portfolios and improve cash flow. Investors should keep an eye on similar offerings from lenders as the market evolves. For more information, check out our bridging finance guide.
Frequently asked questions
What is bridging finance?
Bridging finance is a short-term loan used to bridge the gap between the purchase of a property and securing a long-term mortgage.
How can I benefit from below-market buy-to-let opportunities?
By using bridging finance, you can acquire properties at a discount, creating immediate equity and enhancing your investment potential.