Does a Vacant Buy-to-to-Let Property Always Need Bridging Finance?

When a tenant moves out and a landlord wants to refresh the property before letting it again, it’s easy to assume that bridging finance is the only option.

But a vacant property doesn’t automatically require a bridging loan.

Mercantile Trust can consider a second charge buy-to-let term mortgage where the property is temporarily vacant and only light works are required before it returns to the rental market.

Can you get a second charge buy-to-let mortgage on a vacant property?

Yes. We can consider a second charge buy-to-let mortgage even when there isn’t a tenant currently living in the property.

This may be an option where:

• The property is temporarily vacant between tenancies
• The landlord intends to return it to the rental market
• Only light improvements or repairs are required
• The anticipated rental income supports the borrowing
• The application meets our wider lending and affordability criteria

Each application is manually assessed and remains subject to valuation and full underwriting.

What type of work can we consider?

The product is intended for properties requiring light works rather than extensive refurbishment.

Examples could include:

• Redecorating
• Replacing flooring
• Updating fixtures and fittings
• Completing minor repairs
• Refreshing a kitchen or bathroom without structural alterations
• Carrying out general maintenance between tenancies

How is affordability assessed if there is no tenant?

As there is no active tenancy, we’ll use the monthly rental figure shown in the Automated Valuation Model (AVM) or physical valuation report to assess affordability.

This allows us to consider the application using the property’s anticipated rental income once the light works are complete and it’s ready to be let again.

The rental figure must be sufficient to cover the commitments associated with both the existing first charge and the proposed second charge mortgage.

How much does the landlord need to have in the bank?

The applicant must have the equivalent of three months of the rental amount shown in the AVM or physical valuation report held in their bank account.

For example, if the rental figure stated in the AVM or valuation report is £1,000 per month, the applicant must provide evidence of at least £3,000 held in their bank account.

This provides evidence that the landlord has funds available while the property is vacant and not generating rental income.

Key lending criteria for vacant buy-to-let properties

Subject to valuation, underwriting and our full lending criteria, we can consider:

• A second charge buy-to-let term mortgage
• Temporarily vacant rental properties
• Light works only
• Affordability based on the rent stated in the AVM or physical valuation report
• Evidence of three months of the stated rental amount held in the applicant’s bank account
• Rental income sufficient to cover both the existing first charge and proposed second charge commitments
• Up to 75% loan-to-value
• Limited company and personal-name borrowers

What should brokers include with the application?

Providing clear information at the start can help us assess the case more efficiently. Brokers should include:

• The reason the property is vacant
• Details of the previous tenancy
• A clear schedule of the proposed works
• The estimated cost and timescale for completing the work
• The expected monthly rental income
• Evidence of three months of the AVM or valuation report rental amount held in the applicant’s bank account
• Details of the existing first charge mortgage
• Confirmation of when the landlord expects to put the property back on the rental market

When might bridging finance be more suitable?

Bridging finance may be more appropriate where:

• The anticipated rental income doesn’t support a term mortgage
• The application falls outside our second charge buy-to-let criteria

The right solution will depend on the condition of the property, the work required, the expected rental income and the landlord’s longer-term plans.

Vacancy doesn’t automatically mean bridging

A temporary gap between tenancies is a normal part of managing a rental property.

Where the property requires only light works, the rental figure supports affordability and the landlord has three months of the stated rental amount held in the bank, a second charge buy-to-let term mortgage may be considered.

That’s why it’s worth discussing the case before assuming bridging finance is the only option.

Speak to our team

Have a client with a temporarily vacant buy-to-let property?

Send us the case details, including the proposed works, existing first charge and expected rental income. Our team will review the circumstances and establish whether a second charge buy-to-let term mortgage could be considered.

All applications are subject to status, valuation, lending criteria and full underwriting. Terms and conditions apply.

Your client’s property may be repossessed if they do not keep up repayments on a debt secured against it.