What is the APRC and what is the representative example for a BTL revolving credit facility?

What is the APRC and what is the representative example for a BTL revolving credit facility?

For UK property investors and landlords, maintaining liquid capital is key to securing new deals, funding renovations, and managing cash flow. Traditional options like bridging finance or remortgaging can be slow or rigid. A secured Buy-to-Let (BTL) revolving credit facility offers a modern alternative. It acts like a property overdraft, allowing you to draw down funds, repay them, and draw them again without reapplying every time.

To make an informed choice, you must understand the costs. This guide explains how the Annual Percentage Rate of Charge (APRC) works for this product and provides a representative example to help you evaluate if it fits your property investment strategy.

What is a BTL Revolving Credit Facility?

A BTL revolving credit facility is a secured financial product, registered as a second charge against your existing residential buy-to-let property. This means it sits behind your first-charge mortgage. It is not an unsecured business loan, a personal credit card, or a generic, unsecured business line of credit.

Because it is secured against your property assets, it typically allows landlords to access larger sums and better interest rates than unsecured alternatives. Once arranged, you can typically draw down funds within 24 to 48 hours. This makes it ideal for time-sensitive landlord scenarios, such as funding refurbishments, purchasing properties at auction, covering unexpected void periods, making Energy Performance Certificate (EPC) upgrades, or securing deposits for portfolio expansion.

Understanding the APRC on a Revolving Facility

The Annual Percentage Rate of Charge (APRC) is a standard calculation used in the UK financial services sector to show the total annual cost of borrowing, expressed as a percentage. It factors in the interest rate, arrangement fees, legal costs, and ongoing charges. You can consult MoneyHelper for more information on how standard mortgage charges are calculated.

For standard BTL mortgages, calculating the APRC is relatively straightforward because you borrow a single lump sum. However, for a secured revolving credit facility, the APRC calculation is more complex. Because interest is only charged on drawn amounts—rather than the full facility limit—your actual borrowing costs may be significantly lower than the headline APRC suggests. If you do not draw down any funds, you generally only pay the initial setup costs, while the rest of the facility remains available without incurring daily interest.

What is the Representative Example for a BTL Revolving Credit Facility?

Since these facilities are highly bespoke and tailored to individual landlord portfolios, lenders must provide a representative example to show a typical scenario. Below is an illustrative example of what a secured second-charge BTL revolving credit facility might look like over a two-year term.

Representative Example:

• Total Facility Limit: £100,000
• Facility Term: 24 months
• Lender Arrangement Fee (2%): £2,000 (often added to the facility)
• Broker and Valuation Fees: £1,500
• Assumed Average Drawn Balance: £50,000 (assuming the landlord draws and repays throughout the term)
• Annual Interest Rate on Drawn Funds: 10.8% per annum (charged monthly at 0.9% on the outstanding drawn balance only)
• Interest on Non-Drawn Funds: 0% (no interest charged on the remaining £50,000 limit)
• Total Cost of Interest over 24 Months: £10,800 (calculated on the £50,000 average drawn balance)
• Total Fees and Charges: £3,500
• Total Amount Payable: £64,300 (comprising the £50,000 drawn capital, £10,800 interest, and £3,500 in fees)
• Representative APRC: 14.5% (calculated based on the total fees and the pattern of drawing down 50% of the facility limit over the term)

Your actual APRC may vary depending on how much you draw down, how long the funds remain outstanding, and the specific valuation of your properties. Once set up, interest is calculated only on the daily outstanding balance of the drawn funds, giving you full control over your borrowing costs.

Comparing Revolving Credit to Bridging Finance and Remortgaging

When property investors need fast capital, they typically look at bridging finance or remortgaging. Understanding how a secured revolving credit facility compares to these options can help you save money and increase your investment agility.

Bridging Finance: Bridging loans are designed for short-term use, but they can be rigid. They are categorised as either open or closed. A closed bridging loan has a firm, predetermined exit date (such as a finalised sale), whereas an open bridging loan has no fixed end date but usually carries a maximum term of 12 months. Unlike revolving credit, most bridging loans roll up interest; monthly payments are not typical. You must also reapply and pay new setup fees every single time you need a new loan, whereas a revolving facility remains open for you to draw upon instantly.

Remortgaging: Remortgaging to release equity can take several weeks or months, and it may force you to break your current competitive fixed-rate mortgage, resulting in high early repayment charges. A second-charge revolving credit facility sits behind your existing mortgage, preserving your first-charge rate while granting you fast, flexible access to cash.

When considering any secured borrowing, you must assess the financial risks carefully. Your property may be at risk if repayments are not made. Defaulting on your payments or failing to repay the drawn funds according to the terms can lead to severe consequences, including legal action, repossession, increased interest rates, and additional charges.

People also asked

What is the difference between a secured and unsecured revolving credit facility?

A secured BTL revolving credit facility is backed by a second charge on your property, offering higher limits and lower rates. Unsecured facilities do not require property security but generally feature lower borrowing limits and higher interest rates.

How quickly can I draw down funds from a BTL revolving credit facility?

Once the second-charge security is set up on your property portfolio, you can typically draw down and receive funds in your account within 24 to 48 hours of a request.

Can I use a BTL revolving credit facility to purchase property at auction?

Yes, this facility is ideal for auction purchases because it provides rapid access to deposit funds within 24 to 48 hours, helping you complete transactions within strict deadlines without waiting for bridging finance approval.

Do I need a credit check to set up a BTL revolving credit facility?

Yes, lenders will perform credit checks and assess your portfolio equity. 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)

What happens if I default on a secured second-charge facility?

Your property may be at risk if repayments are not made. Defaulting can trigger legal action, repossession, increased interest rates, and additional charges.

Is Promise Money a lender or a broker?

Promise Money is an FCA-authorised broker (FCA Ref: 681423), not a direct lender. We compare the market to find the best BTL revolving credit facilities, second-charge mortgages, and bridging options for your portfolio.

How to Arrange Your BTL Revolving Credit Facility

If you are looking to expand your portfolio, fund renovations, or secure an agile line of credit behind your existing mortgage, a secured BTL revolving credit facility could be the ideal tool. Rather than waiting weeks for remortgaging or paying repetitive setup fees on bridging loans, this facility offers a continuous, flexible safety net.

As an FCA-authorised broker, Promise Money can help you secure competitive rates. To obtain a tailored quote with a personalised representative example, visit the Promise Money Landlord Revolving Credit hub or call our expert advisory team on 01902 585020 today.