One of the biggest problems buying property via a bridging loan has always been that you need to evidence an exist strategy to close the bridge. Well not any more this product does away with the exit strategy as it has one built in.

6 month Bridging Loan reverting automatically to a standard Buy To Let Mortgage

How this product works: Purchase the property with our fast bridging loan, funding up to 75% of the open market value, not the purchase price. (Loan must not exceed 100% of the purchase price.) The applicant then carries out refurbishment work.

Once applicant confirms that the refurbishment works are complete, the original valuer will revisit the property and will confirm that works have been completed to a satisfactory standard, and that the property is now in a condition to let. A second valuation will be provided by the valuer.

Inspectors will in all cases visit the property at the Bridging assessment stage, and will reserve the right to visit at any time during the refurbishment and/or on completion of such works.

Applicant will be required to provide confirmation that a tenancy (at appropriate level – see below) is agreed and which point Bridging facility will convert to buy to let element. If the applicant is unable to provide a suitable tenancy, or details of a pre-let, 3 months mortgage payments will be deducted from the BTL advance, or if sufficient equity is not available will be required to pay 3 months mortgage payments in advance.

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The initiative will be part of the FSA’s keenly awaited mortgage review, set to be published which early next week, according to an exclusive in The Times.

The sweeping report is also targeting buy to let mortgages, which could be regulated for the first time, said the paper.

Self-cert mortgages, also dubbed liar loans, Self-certification mortgages accounted for one third of new loans in 2007, or about GBP 100 billion of the GBP300 billion loans granted that year. Buy-to-let accounted for 12 per cent of all properties, or more than three million homes in the same year.

But new loans in both sectors plunged to almost zero in the past year as lenders have deserted the riskier parts of the housing market.

Self-cert loans have been one of the fastest-growing parts of the mortgage market in recent years. They were mainly targeted at the self-employed or those with mulitple income streams who find it tough to prove their irregular income streams.

Unlike standard mortgages, for which customers must provide pay slips and other documents proving salary and expenditure, self-cert loans require far fewer documents and rely more on customers’ declarations that they can meet their repayments.

However, in the donwturn defaults on self cert mortgages have been at much higher rates than the industry average.

HBOS and Bradford & Bingley were among the biggest self-cert lenders. HBOS was sold to Lloyds TSB in a rescue deal in September last year and B&B collapsed and had to be partially nationalised.

The FSA is also considering regulating buy-to-let loans for the first time. That could require professional landlords, who may have portfolios of 500 properties, to fill in the same forms that individual homeowners have to complete. Such a move would be inappropriate, experts assert, and could further stifle buy-to-let lending, which has also nose-dived in the past 12 months.