Is a revolving credit facility faster than remortgaging to release equity?

Is a revolving credit facility faster than remortgaging to release equity?

For active property investors in the UK, timing can mean the difference between securing a lucrative deal and missing out entirely. When a prime property opportunity arises—such as a discounted house at auction or a sudden renovation project—you need fast access to capital. Historically, landlords have turned to remortgaging to release equity from their portfolios. However, this process can be slow, frequently taking several weeks or even months to finalize.

This has led many investors to ask: is a revolving credit facility faster than remortgaging to release equity? The simple answer is yes, particularly when looking at ongoing access to funds. A secured Buy-to-Let (BTL) revolving credit facility works like a property overdraft, allowing you to draw down cash, repay it, and draw it down again without submitting a new application each time. Let us look closely at how these two options compare, how they work, and what risks you must consider.

What is a BTL Revolving Credit Facility?

A BTL revolving credit facility is a secured financial product, registered as a second charge against your residential buy-to-let property. It is not an unsecured business loan, a business credit card, or a generic revolving credit line. It is specifically designed for UK landlords who want to use the equity in their rental properties to fund business growth.

Because it is structured as a second charge, it sits directly behind your existing first-charge mortgage. This is a major benefit for landlords who currently have a competitive fixed-rate mortgage. If you were to remortgage to release equity, you would have to replace your entire mortgage, potentially losing your low interest rate and facing early repayment charges. With a secured revolving credit facility, your primary mortgage remains completely untouched.

Promise Money is an FCA-authorised broker (Reference Number 681423). You can verify our details on the Financial Conduct Authority register. We act as a broker to help you find the right secured facilities for your property business, rather than lending the funds directly.

Speed Comparison: Setup vs. Draw-down

To answer the speed question fully, we must divide the timeline into two phases: the setup phase and the draw-down phase.

During the initial setup phase, the speed of both options is relatively similar. Setting up a revolving credit facility for the first time requires the lender to conduct a valuation on your property, perform legal searches, and assess your creditworthiness. This setup typically takes between three to six weeks.

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Once the facility is successfully established, however, the comparison changes entirely. If you want to draw down funds from an active revolving credit facility, the money is typically available in your bank account within 24 to 48 hours. By contrast, if you choose to remortgage to release equity for a second or third project, you must go through the entire application, valuation, and legal process all over again, taking another several weeks or months.

How Landlords Use This Speed in the Real World

The rapid draw-down time of a pre-arranged revolving credit line makes it highly practical for several common landlord scenarios:

• Property Auctions: Buying a property at auction typically requires you to pay a 10% deposit on the day of the auction, with the remaining 90% balance due within 28 days. A traditional remortgage is simply too slow to meet these rigid deadlines. Having a revolving credit facility ready means you can draw the required funds almost instantly to secure your purchase.
• Quick Refurbishments: If you purchase a property that needs a rapid turnaround to make it habitable, you can draw down funds to cover the costs of materials and tradespeople. Once the work is finished and a tenant moves in, you can use the rental income or long-term refinancing to repay the balance, leaving the credit line open for your next project.
• Meeting EPC Standards: With changing energy efficiency rules in the UK, many landlords must upgrade their properties to meet higher Energy Performance Certificate (EPC) ratings. Drawing funds from a revolving credit facility allows you to carry out these insulation, heating, or glazing upgrades quickly, preserving your cash reserves.
• Bridging a Cash Flow Gap: Whether you are dealing with a temporary tenant void period or waiting for a long-term remortgage to complete, a secured overdraft provides an immediate cushion to ensure your bills and first-charge mortgage payments are met on time.

Comparing Secured Revolving Credit to Bridging Finance

Bridging finance is another popular product used by landlords who need quick capital. However, bridging loans are structured very differently from a revolving credit facility.

First, bridging loans are categorized as either open or closed. Closed bridging loans have a fixed repayment date and a clearly defined exit strategy, such as the confirmed sale of a property. Open bridging loans do not have a firm exit date, although the lender will still expect the loan to be repaid within a set timeframe, typically up to 12 or 24 months.

Second, bridging loans typically roll up the interest. This means you do not make monthly payments; instead, the interest accumulates and is paid in full when the loan is cleared. While this can help with monthly cash flow, it can become highly expensive if your exit strategy is delayed.

Additionally, bridging loans are single-use products. Once you pay off a bridging loan, the facility is closed. If you want to buy another property, you have to pay new arrangement fees, valuation fees, and legal fees. A secured revolving credit facility, however, remains open. You only pay interest on the money you have drawn down, not the entire limit, and you can reuse the same facility repeatedly without paying new setup costs.

Understanding the Risks of Secured Borrowing

While the speed and flexibility of a revolving credit facility are highly appealing, you must always remember that this is a secured debt. Your property may be at risk if repayments are not made.

Because a revolving credit facility is secured as a second charge against your buy-to-let property, failing to make your repayments on time can have serious consequences. If you default on the agreement, the lender has the legal right to take action to recover their money. This can result in legal action being taken against you or your property business, the eventual repossession of your investment property to clear the outstanding debt, an increase in your interest rates, and heavy additional charges and administrative fees being added to your outstanding balance.

Therefore, it is essential to have a clear, realistic repayment plan before drawing any funds from your facility.

People also asked

Is a BTL revolving credit facility an unsecured loan?

No, a BTL revolving credit facility is a secured financial product that is registered as a second charge against a residential buy-to-let property, meaning your asset is used as security for the lender.

Can I use a revolving credit facility for my own home?

No, this specific product is designed exclusively for UK landlords and property investors to use against their residential buy-to-let properties, and is not available for primary residential homes.

How does interest work on a secured revolving credit facility?

Interest is only charged on the money you have actually drawn down from the facility, while the remaining undrawn credit limit does not incur any interest charges at all.

What happens if I cannot make the repayments on my revolving credit facility?

Your property may be at risk if repayments are not made, and default could lead to legal action, property repossession, increased interest rates, and extra charges.

How quickly can I get the money once the facility is set up?

Once your secured revolving credit facility has been fully arranged, you can typically draw down and receive your funds in your bank account within 24 to 48 hours.

Finding the Right Solution

If you are trying to decide whether a revolving credit facility or a traditional remortgage is the right path for your property business, we can help you weigh up the costs, benefits, and timelines.

Promise Money is an experienced, FCA-authorised broker here to guide you through the process. To find out more about how we can help you secure the funding you need, visit our secured revolving credit information page or contact our friendly team directly on 01902 585020.