Can I set up a revolving credit facility on one property and use the funds across my whole portfolio?

Can I set up a revolving credit facility on one property and use the funds across my whole portfolio?

As a UK property investor, managing cash flow across a growing portfolio can be a constant challenge. When a new investment opportunity arises, or an urgent repair is needed on one of your houses, waiting weeks for traditional finance can mean missing out. This is where a Buy-to-Let (BTL) revolving credit facility can help.

If you have equity in a single buy-to-let property, you may be able to secure a revolving credit facility against that single asset. Once arranged, you are generally free to use the drawn funds to support any part of your wider property portfolio. It acts like a flexible property overdraft, allowing you to draw, repay, and redraw funds as needed without having to apply for a new loan each time.

How does a BTL revolving credit facility work?

Unlike a generic business loan or an unsecured credit card, a BTL revolving credit facility is a secured financial product. It is specifically designed for UK landlords and is secured as a second charge against a residential buy-to-let property that you already own. This means it sits behind your existing first-charge mortgage, leaving your current mortgage deal completely untouched.

Once the facility is set up, you do not receive a lump sum that you must pay interest on immediately. Instead, you are granted a credit limit based on the available equity in your security property. You only pay interest on the money you actually draw down, not on the total limit. When you repay the drawn amount, your available balance goes back up, ready to be used again.

After the initial setup is complete, you can typically draw down funds in as little as 24 to 48 hours. This makes it an incredibly agile tool for busy landlords who need quick access to capital.

Using funds across your entire portfolio

The beauty of this facility is its flexibility. While the security is tied to one specific property, the funds you draw do not have to be spent on that same property. You can use the capital across your entire portfolio for a variety of strategic purposes, including:

• Funding refurbishment costs: You can draw funds to refurbish a completely different property in your portfolio, helping you increase its rental value or prepare it for sale.
• Auction deposits: Buying at auction requires a fast deposit, typically 10% on the day. Having a revolving facility allows you to draw the deposit in 24-48 hours, securing the deal while you arrange long-term finance.
• Meeting EPC upgrades: With potential changes to energy efficiency standards, you can use the facility to fund insulation, boiler upgrades, or double glazing across multiple properties.
• Covering void periods: If a tenant leaves unexpectedly, you can draw from the facility to cover mortgage payments and maintenance costs until a new tenant is found.
• Bridging gaps during remortgages: If a mortgage deal is taking longer than expected to complete, you can use the revolving facility to keep your projects on track.

How does it compare to remortgaging and bridging finance?

Landlords traditionally rely on remortgaging or bridging loans to release equity. While these are useful tools, a revolving credit facility offers distinct advantages in specific situations.

Revolving credit vs. Remortgaging

Remortgaging to release equity means refinancing your entire first-charge mortgage. If you currently have an excellent historical interest rate, remortgaging could force you onto a much higher rate, costing you thousands of pounds over the term. Furthermore, remortgaging can take several months and you pay interest on the entire lump sum from day one, even if you do not need all the cash immediately. A revolving credit facility sits as a second charge, keeping your original low-rate mortgage in place.

Revolving credit vs. Bridging finance

Bridging finance is a popular short-term funding option, but it is typically designed for single transactions and has a strict end date. Bridging loans can be open or closed:

• Closed bridging loans: These have a fixed, highly feasible exit date, such as a confirmed property sale or an approved refinance deal that is ready to complete.
• Open bridging loans: These are more flexible because there is no firm exit date, though lenders will still require a realistic plan showing how you intend to repay the loan.

With most bridging loans, monthly payments are not typical because the interest is rolled up and paid at the end of the term. While this helps with monthly cash flow, it can make bridging expensive if the loan runs for several months. In contrast, a revolving credit facility allows you to draw down small amounts, repay them quickly, and reuse the facility repeatedly without paying new arrangement fees each time.

Risks and compliance to keep in mind

While a revolving credit facility offers excellent flexibility, it is crucial to remember that it is a secured debt. Your property may be at risk if repayments are not made. Because the facility is secured against your asset, failing to meet your repayment obligations could lead to serious consequences, including:

• Legal action taken against you by the lender.
• Repossession of the security property.
• Increased interest rates on your outstanding balance.
• Additional administrative charges and penalty fees.

Before applying, you should carefully consider your cash flow and ensure you have a clear plan to repay any drawn balances. Lenders will assess your credit history and the value of your security property during the application process. To understand your current credit standing, you can check your credit report online. Get your free credit search here. It’s free for 30 days and costs £14.99 per month thereafter if you don’t cancel it. You can cancel at anytime. (Ad)

For official guidance on managing property debt and understanding mortgage regulations, you can read more on the MoneyHelper website, which offers free, unbiased financial advice for UK residents.

How Promise Money can help

Promise Money is an FCA-authorised broker (Ref: 681423), not a direct lender. We work with a wide panel of lenders to help you find the right secured BTL revolving credit facility for your portfolio. Our team can help you assess the equity in your properties, compare rates against traditional bridging or second-charge mortgages, and guide you through the application process.

If you would like to explore your options, you can speak to our experienced team by calling 01902 585020 or by visiting our secured revolving credit hub.

People also asked

Can I secure a revolving credit facility against a property with a mortgage?

Yes. A BTL revolving credit facility is designed to sit behind your existing first-charge mortgage as a secured second charge, meaning you do not have to refinance your primary mortgage.

Do I pay interest on the full credit limit of the facility?

No. You only pay interest on the funds you actually draw down from the facility, while the remaining unused credit limit does not incur interest charges.

How quickly can I access the money once the facility is established?

Once your revolving credit facility is fully set up, you can typically draw down funds into your bank account within 24 to 48 hours of making a request.

What happens if I miss payments on my secured revolving credit facility?

Because the loan is secured, failing to make repayments can result in additional charges, increased interest rates, legal action, and ultimately the repossession of your property.

Is this facility the same as an unsecured business credit card?

No. This is a secured financial product that uses residential buy-to-let property as security, which typically allows for much larger credit limits than unsecured borrowing.