The first quarter of the year has flown by and the property market remains strong. With figures for March showing that house prices are still 8% up year on year, investors and developers alike will need support from brokers to find opportunities in between the price rises.

Although the market is still booming, there will always be deals to be made for those with a close eye on investment possibilities.

So how can a broker provide even more value to their clients while saving valuable costs in the property life cycle? With a well-structured bridge-to-let.

There is still a lack of true bridge-to-let mortgages

We have seen a rise in interest and applications in bridge-to-let mortgages from those wanting a smooth transition between two specialist products. Developers and investors alike are benefiting from the seamless move across two products, the time saved in the process, and the cheaper costs that come with combining two products and applications.

There is a trend of lenders in the bridging space diversifying into buy-to-let (BTL) mortgages. Just this week, at the time of writing, United Trust Bank announced the addition of a BTL division. But there is still a lack of true bridge-to-let mortgages.

There is definitely room for innovation to fill the growing demand for this all-encompassing product

This is down to several factors, including the separation of products internally. In some cases, different funding lines can make it hard to pre-underwrite the BTL with the bridge, but also the valuation risk and reliance if the turnaround of the project is not fast  — that is, three to six months.

Clients want surety of the exit. Having another underwrite, even if it is lighter touch, makes it less appealing and begs the question of whether the borrower simply splits the two parts across different lenders, if they are not receiving that confidence up front.

All encompassing

There is definitely room for innovation to fill the growing demand for this all-encompassing product.

We see the trend of landlords buying to add value or to convert to houses in multiple occupation for greater yield, but not wanting to take the risk of the bridge without the exit being there. They are landlords, at the end of the day, and not developers, so the appetite for risk is often lower.

Bridging lenders are diversifying into BTL mortgages

With the property market and demand for housing being as strong as they are, landlords are under more pressure to increase their returns and sometimes a bridging loan followed by a BTL mortgage does not stack up for them.

Yet a conventional BTL mortgage will not work for the purchase, meaning the call for a smoother product offering with some financial saving for the client is greater than ever.

For those lenders that have the capability to offer this product, it is great for client retention and for building relationships too.

Lucy Barrett is managing director of Vantage Finance