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BTL mortgages for HMOs


What method of financing do you use to purchase a property to convert to an HMO, before re-financing to an HMO product?  I'm being told by a broker it won't be possible to get a mortgage, (not due to the fact the house is not mortgageable, but due to the fact I’ll be carrying out ‘extensive works’) and that I have to use bridging.

Are there any mortgage lenders who will allow you to do works on a property?  What are the parameters for this?

Or is bridging my only option?


Your broker is correct in so far as no mortgage lender would allow you to do the level of work required to convert a property to an HMO, whilst you had a mortgage with them.

It’s not so much that lenders don’t allow you to do work to improve the property, they do, but converting to an HMO and then filling it with multiple tenants breaches the T&Cs for that type of mortgage, which usually allows only one AST for the property.  The result is that...

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Honey, I shrunk the deposit!

When it comes to investing in property the big challenge, especially for newbies, is getting enough money in the bank to pay that all important 25% deposit.  Depending on where you are buying property that can run to many thousands of pounds.

So what if you could trim that 25% down to nearer 10%?

Here’s the strategy:

Step 1:  Complete the purchase – using bridging finance rather than a BTL mortgage.  Some properties won’t be mortgageable anyway, but that doesn’t mean they’re a bad buy.

Step 2: A quick exchange of contracts.  This can be done as soon as your loan is approved and as soon as your solicitor is able to arrange it.  We should be talking days here, rather than weeks and certainly not months.

Step 3: Quick completion.  Again, that will be as fast as your solicitor is able to do it. Often this will be in 28 days or even quicker.

Step 4: Execute your exit strategy from the day of purchase.  This means if...

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Does flipping after three months affect mortgage potential

buy to let Jan 20, 2019


I’m flipping a house after three months,  I’ve heard most lenders won’t lend against a property unless I (the seller) have owned it for at least six months!, is this right?


That’s true to a point, but it depends on the lender.  A number of BTL lenders impose this restriction on the seller.

However, you shouldn’t really be selling to other investors as they view it as a logical rather than emotional purchase, often not wanting to pay full market value.

Main residence lenders are different, to a degree.  There are some that still impose the same restriction on sellers, but it is not across the board by any means.

So your buyers will not have access to all lenders (subject to their circumstances) until you have owned the property for 6 months.  The net result of that is they may be excluded from some market leading deals.

The key here from people who successfully sell within 6 months is - transparency.  You...

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It’s all in your mind

mindset Jan 10, 2019

Belief is powerful.  If you believe you can do something it gets much easier to succeed.  Of course, the opposite applies, if you don’t believe you can achieve something you will get what you expect.

I’ve been practising neuro-linguistic programming (NLP) for over fifteen years. So when I received a cancer diagnosis from my doctor in April 2016, I knew pretty much what I needed to do, to use my mind to allow my body to heal itself.  I’d been diagnosed with stage 3 (next to the worst level) in several places so I knew I had to take it seriously.

I underwent chemo as well, but I conditioned my mind so that I didn’t suffer any adverse effects from chemotherapy.  I felt perfectly healthy throughout the whole process—I never even needed to take a single day off work.

I got scanned at different points; to check progress, Eight weeks later the scan showed I’d reduced the cancer  by 90%, and in another twelve weeks I’d got...

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Making better decisions

mindset Dec 20, 2018

When it comes to decisions, it’s tempting to take the line of least resistance.  That’s usually choosing NOT to do something or to do nothing.  Nobody achieves success by doing nothing! 

Let me share with you something that happened to me.

In April 2016 I was diagnosed with level 3 Non-Hodgins Lymphoma, an aggressive form of cancer.  It was already in more than one location and the severity scale only goes up to 4, so I had a choice:

  • Follow medical advice and undergo chemotherapy treatment and hope it worked
  • Man up, take responsibility for dealing with it and, most importantly, take action

Having done a lot of self-development over the years, there really was only one choice for me.  I found an NLP coach and together we devised my strategy for conquering cancer, using a number of NLP techniques including meditation, visualisation and affirmation. 

I read up on holistic approaches to conquering cancer, from people who had been there and...

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Delayed completion for faster profits

ninja learning Dec 10, 2018


I am looking for some inspiration on a potential property.  It is a lovely property that is presently mixed use as a business and flats.

It can be converted to five flats that will fetch a premium price due to the location. The person selling is prepared to listen to options and is prepared to let us develop out the property while she still owns it, therefore, minimal cost to us at purchase.

 I have a few ideas myself but am looking for a bit of inspired creativity.


One creative solution was suggested by one of my students who recognised that this opportunity fits one of the strategies I teach on my Ninja Investor Programme workshops.

Through our brokerage, we have financed a number of projects funded exactly this way. So this is not just theory, it works and works well when the number are right.

If you have the current owner’s agreement and permission to enter the property and do the required works to do the conversion, then the delayed...

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From landlord to developer?

Uncategorized Nov 30, 2018

Most property investors are looking for existing buildings to convert, refurb and either turn into rental income or sell at a nice profit.  However, if you’re looking for a new challenge, it’s tempting to consider building from scratch.

Before you get excited at the idea of building homes to either rent or sell, you need to know about finance.  This isn’t mortgage territory – and it really isn’t bridging finance territory either.  The funding for new build projects is called ‘development finance’.

Self-build mortgages do exist for a main residence, but if the lender suspects that you’re borrowing a self-build mortgage and planning to develop and sell on, they can pull the funding at any point, regardless of what point the project has reached.

Development finance lenders have a policy of putting up barriers to entry and this lets them choose the projects that they consider have a high chance of success. 


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Buying your first property

bridging finance Nov 20, 2018


I’m looking to buy my first house and I have £40K in cash ready to go.  Do I:

  1. Buy it outright. Do the full refurbishment (I’m looking at 12 weeks).  It will be worth £80k once complete and rent for £500pcm. so get a mortgage at £75K  LTV, once it’s ready to let.
  2. Apply for a mortgage at £75 LTV and wait at least six months to get my equity out.

Or is there a better way?


The argument for buying with cash

  1. You can buy much faster than getting bogged down in a mortgage application process
  2. If you can buy faster, you should be able to negotiate to buy cheaper - to a degree
  3. During the refurb period you have no monthly payments to make and incur no interest
  4. Once refurbed, value uplifted and tenanted you can apply for a mortgage. Wait six months if you want access to preferential interest rates; don’t wait if you don’t

At any point in between if you manage to find your next deal and...

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Can you get 100% bridging?

bridging finance Oct 30, 2018


Can you 100% fund with bridging an optioned project using planning gain as equity?

The project is a conversion of offices to residential, with planning for Change of Use.

The projected uplift in value is 35% upon consent. total circa £1m.

Although I have no actual direct experience, I do have a few very large client successes and similar smaller scale projects in my portfolio.


In terms of loan to purchase price, bridgers divide into broadly 3 camps

  1. Those that lend on the lower of the purchase price or value, exactly the same as mortgage lenders do
  2. Those that will recognise a value uplift, but put in a maximum loan to purchase percentage override i.e. the lower of 70% of value and 85/90% of purchase price. This would mean whatever value uplift you created they would still require a minimum of at least 10% of purchase price input from you
  3. Those that genuinely ignore the purchase price and lend on value

Of those, No. 3 is the rarest, but they do exist...

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Buying an unmortgageable property

Some people will warn you that buying a property that you can’t get a mortgage on is madness.  If you listen to them you could be missing out on some great opportunities that may be unmortgageable – but are still very profitable!

Traditional lenders have a long list of types of property they won’t touch.  These include:

  • Derelict properties or properties that are in severe disrepair
  • Properties without a kitchen and bathroom
  • Properties that have more than one kitchen
  • Properties with structural defects, damp, mould, wet or dry rot, wall tie problems
  • Properties with Japanese Knotweed
  • Non-standard construction properties – like the Wimpey No-Fines homes built after WWII.
  • Properties where there’s a boundary dispute
  • A house to flats conversion that has been done without proper planning permission (or planning permission has been applied for after the fact)
  • Properties under £50K in value
  • Properties with fewer than 70 years remaining on the...
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