Bridge to a first-time investment

Last autumn a leading buy-to-let lender published analysis of industry data which revealed a clear trend – buy-to-let landlords are getting younger. The average age of landlords purchasing properties with a buy-to-let mortgage has decreased from 46.4 years in 2014 to 42.9 years in 2023. The analysis found that this shift has been largely driven by an increasing number of landlords in their thirties stepping into the market. Given that the average age of a residential first-time buyer is also in the thirties, this would indicate a growing number of first-time buyer, first-time investors.

For many first-time buyers, homeownership in the traditional sense may feel out of reach due to affordability constraints in the areas where they work. Instead, they are turning to property investment as a way to get a foothold in the market—purchasing a rental property as their first step rather than buying a home to live in themselves. 

First-time buyer, first-time landlords can face, however, face a challenge when it comes to securing finance. Many lenders remain cautious about offering buy-to-let mortgages to those without prior landlord experience, leaving limited options for those eager to make their first investment. 

In these circumstances, bridging finance can provide new landlords with an alternative way to secure a property and build their experience before switching onto a long-term buy-to-let mortgage. With a bridging loan, first-time landlords can acquire a property, establish a track record of managing rental income and tenants, and ultimately enhance their eligibility for mainstream buy-to-let finance.

An increasingly popular strategy for younger landlords is targeting properties that offer the prospect of better returns – either by letting the property as an HMO or multi-unit let or making renovations to increase value. These properties present an opportunity for higher returns but often require refurbishment to unlock their full potential – something often achievable with bridging finance. By providing short-term funding for renovations, bridging loans enable investors to upgrade properties, increase rental income, and enhance capital value — all of which contribute to a stronger financial position when refinancing onto a long-term solution.

For first-time buyer, first-time landlords, working with the right lender can be the key to long-term success. Not only is it important to choose a lender that is open to lending to this category of borrower – either as an individual or limited company, but it’s also important to consider the longer-term strategy. Some lenders, like Castle Trust Bank, provide the ability to move seamlessly from a bridging loan to a buy-to-let mortgage, ensuring that investors can transition from short-term to longer term finance with no unnecessary delays or complications. 

Buy-to-let isn’t dying, but it is changing, with a new breed of investors who have different circumstances and aspirations. Bridging finance can help investors achieve their aspirations, from their first investment through to growing and diversifying their portfolio.