No Deposit? No Problem — Structuring a 6-Bed HMO Purchase with Zero Liquid Funds

Our client secured a property to convert into a 6-bed HMO — but came to us with no liquid funds for the deposit. Rather than letting the opportunity slip, we restructured the deal and worked with the lender to find a solution. This case study explains how we helped the client proceed with the purchase, fund the full refurbishment, and plan a clear exit strategy from day one.

The Challenge

The client had identified a strong acquisition opportunity — a property suitable for conversion into a 6-bed HMO. However, their capital was tied up in existing property and they had no liquid funds available for the deposit. Without a creative funding solution, the deal would have fallen through.

What the Client Needed

• A way to raise the deposit without selling existing assets
• A bridging loan to complete the purchase
• A build facility to cover the full refurbishment costs
• A clear exit strategy mapped out from the start

Our Approach

1. Raising the deposit from existing property — We worked with the lender to raise the entire deposit against another property the client already owned, unlocking equity without requiring a sale.
2. Structuring the bridging loan — We arranged a bridging loan to complete the purchase of the new property.
3. Securing a £150,000 build facility — We secured a build facility to cover the full refurbishment, ensuring the client had the funding to carry out the conversion works.
4. Exit strategy from day one — We mapped out the exit strategy at the outset, planning to apply for the HMO mortgage at the earliest suitable stage to help reduce the overall bridging interest costs.

Key Considerations

If your capital is tied up and you are considering a property purchase, here are some factors to think about:

• Using existing property as security — It is sometimes possible to raise funds against property you already own, either through a second charge or a remortgage. This can provide the deposit for a new purchase without requiring liquid cash.
• Bridging as a short-term solution — Bridging loans are designed to be repaid quickly, so having a clear exit strategy — such as refinancing onto a term mortgage — is essential to manage costs.
• Build facility planning — Ensure the refurbishment budget is realistic and that the build facility covers all anticipated costs. Unexpected overruns can be difficult to fund mid-project.
• Timing the exit — Applying for the term mortgage early, before the bridging loan matures, can help minimise interest costs and avoid extension fees.
• Working with a specialist broker — Deals involving multiple properties and layered finance structures benefit from a broker who can coordinate all elements. Learn more about how we work.

Outcome

We raised the entire deposit against another property the client owned, structured a bridging loan to complete the purchase, and secured a £150,000 build facility to cover the full refurbishment. The exit strategy was mapped out from day one, with the HMO mortgage application planned for the earliest suitable stage to help reduce overall bridging interest costs.

Frequently Asked Questions

Can I buy a property with no deposit?

In some cases, yes. If you own other property with available equity, it may be possible to raise the deposit by borrowing against that asset. This is subject to lender criteria and the available equity in your existing property.

What is a second charge loan?

A second charge loan is a loan secured against a property that already has a mortgage (the first charge). It sits behind the existing mortgage and allows you to borrow against the equity in the property without remortgaging.

How quickly can a bridging loan be arranged?

Bridging loans can often be arranged more quickly than traditional mortgages, sometimes within a few weeks. The exact timescale depends on the lender, the complexity of the deal, and how quickly legal and valuation work can be completed.

What is an exit strategy?

An exit strategy is the plan for repaying a bridging loan. Common exits include refinancing onto a longer-term mortgage, selling the property, or using funds from another source. Lenders require a clear exit strategy before they will approve a bridging loan.

Can I get a build facility for an HMO conversion?

Yes. Many lenders offer build facilities specifically for HMO conversions and refurbishments. The amount available typically depends on the scope of works, the property's end value, and your experience as an investor. See our HMO finance page for more details.

What happens if the refurbishment costs more than expected?

If costs overrun, you may need to source additional funding. Having a contingency budget and working with a broker who can help arrange further finance if needed is advisable.

Next Steps

If you need funding for a purchase, refurbishment, or development — even when liquidity is tied up — we can help find a solution. Get in touch to discuss your project, or explore our bridging finance options.