With the older generation generally in a better financial position than those in their twenties and thirties, it is becoming more common for grandparents to buy rental property and use the income to increase their pension pot. According to recent findings by the Telegraph, more and more over-sixties are buying property at auction, with the aim to renovate, increase the property value and then rent out to tenants for a profit.
The Telegraph stated that in the last four years, ‘the number of older landlords has risen by 30 per cent’. Auction Finance has also revealed in a survey that eight out of ten landlords relied on their buy to let properties as their pension fund. As older people have built up sufficient savings and equity, they can find it easier to provide the deposit needed at auction. While buying property at auction may not be for the faint hearted, it can be an excellent way to find a bargain or two.
Buying property at auction
At a property auction, you traditionally need to put down a 10% deposit straight away if your bid is successful. You will then need to pay the rest in a 28-day time frame. Researching the list of properties and preparing for an auction day is crucial to getting the property you want and should also help you spot any big problems before you put in a bid. For more information and tips, check out our article on buying property at auction.
If the property you choose is run-down and in need of major refurbishment, it might be tricky to obtain a mortgage, especially in a short time-frame. This is where bridging finance can help.
A bridging loan or bridging finance can provide short-term funding to buy and renovate property. It can be arranged in a matter of days, which solves the issue of raising funds within the 28 day timeframe when buying at auction.
Together with a fast turnaround, a bridging loan can ‘bridge’ the gap between longer-term lending like a mortgage. This is advantageous if you are unable to secure a conventional mortgage; for instance, if the property is ‘uninhabitable’. A bridging loan can fund the renovation work until the property is restored to a suitable standard which will in turn enable you to get a mortgage.
For more information on bridging loans and the types of finance available, fill in our enquiry form. Our team of expert advisers can review your personal circumstances to find the right bridging loan for you.