Buy to Let and HMO
Buy to let refers to purchasing a property, perhaps refurbishing it and then renting it out to the public to generate an income. Once the loan term is over, you can decide to refinance or repay your loan using money you have received elsewhere. The HMO side refers to buildings that have two or more people occupying it and sharing amenities, including student accommodation, house shares and bed sites.
Interbay explain that for the buy to let, their finance can be used for light and medium refurbishments such as those that do not require planning permission or affect the size or exterior of the property, including changing windows and renovating bathrooms and kitchens. In terms of heavy refurbs, this refers to structural changes to a building that require planning permission and building regulations such as loft conversions, attics and basements. Applicants without a two year proven track record of refurbishment properties are not permitted to carry out heavy refurbishments.
For properties bought at auction, the loan is always secured and therefore if you do not keep up with repayments, you run the risk of the building being repossessed by the lender to recover their costs.
Commercial and Semi-Commercial Property
Commercial properties are ones that are used for business purposes only and do not have any residents living in them. This includes offices, high street shops, factories and gyms. The properties that Interbay do not lend to include heavy industrial spaces, petrol stations, churches, temples, hostels, bedsits, equestrian centres, public houses, agricultural properties, catteries, kennels, golf clubs, hospitals, mobile home parks, garden centres and telecommunication masts.
The semi-commercial properties relate to those used for business and residential purposes such as offices with flats above them. The interest rates charged each month are slightly higher, ranging from 0.75% to 0.95% and similar to the buy to let and HMO properties, the lower your loan-to-value, the lower your interest rate is because you are essentially putting in more of the capital yourself.
A common purpose of bridging for commercial property is to release equity in the short term. Since the loan is secured, you can receive finance based on using the property as collateral – although you still risk this being repossessed if you default on repayments.
Rates calculated using a margin over 3 month LIBOR (minimum 0.75%) over a 12 month period. LIBOR subject to change every 3 months.
Maximum LTVs from Interbay
The maxium loan-to-value that you can receive is 75% meaning that Interbay will be able to provide 75% of the property value and you will need to come up with the remaining 25% out of your own finances or through investors. The LTV decreases if the loan is over £3.5 million, down to 65% and if it comes to the end of your loan term and you want to re-bridge for an extended period of time, the max then becomes 60%.
Terms of the Loan from Interbay
In terms of fees, you will have a 2% arrangement fee which will involve all the administration to get your loan ready for funding. There are always valuation and solicitor fees to appraise the property and confirm all the loan details through your solicitor. The fees for this will depend on the size and scale of the project and also the rates charged by your professional.
There are no early exit fees after a certain date. So whilst the loan term is a maximum of 18 months, if you feel that you are in a financial position to repay the loan earlier, you may do so and will not be charged anything other than the loan amount and interest outstanding.
Applicants must be a minimum of 21 to apply and a maximum of 85 years old by the time the loan term ends. Borrowers must be UK residents or have lived in the UK for at least 36 months. If you are a non-trading limited Company or limited liability partnership, the directors or members will be required to provide full personal guarantees. The minimum leasehold term is 50 years for buy-to-let and HMO properties and 65 years for commercial properties. Finally, in terms of defaults, a default charge of 0.25% pcm will be applied (3.0% pa) if the loan is not repaid. Your property is at risk of repossession if you do not repay your loan on time.
Countries they operate: England and Wales
Company no: 05595882
Address: Forum 3, Solent business park, Whiteley