- Location - Bristol
- Loan Type - Term Loan
- LGTDV - 65%
- Loan Amount - £800,000
Buying property at auction can provide a good opportunity for investors to access new assets and potentially add both capital and rental value through renovation and refurbishment. As the Alternative Overdraft is a flexible drawdown facility, with funds able to be taken and repaid whenever needed, it provides the perfect vehicle for investors to use at auction purchases.
In this particular case, the client had set up a limited company to purchase and hold their investment properties. They had previously taken bridging loans every time they wanted to buy a property at auction but realised that the Alternative Overdraft gave them the ability to walk into an auction, essentially, as a cash buyer as they would be able to draw on the funds needed within 24 hours.
The client secured the Alternative Overdraft on existing properties within their portfolio, raising a facility at 65% LTV to use as a cash pot to purchase, refurbish and retain new investment properties.
As part of this, their strategy is to use the funds to purchase a property at auction and spend £20,000 to £30,000 on internal refurbishment works. They can then choose to either refinance the property onto a buy-to-let mortgage; put the money back into the overdraft pot and go again. Or, if they choose to sell the investment properties once the refurbishment works have been completed, they can do so, keep their profit again, and put the funds used back into the ‘pot’ so that they are ready to go again.
An Alternative Overdraft facility lasts up to 24 months and at the end of this period, the exit of the facility can be a refinance of the security properties.
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