I am considering the use of a bridging loan and would like to know:
There are a number of bridging lenders and the criteria vary from lender to lender depending on your particular circumstances and the questions you ask. It is a bit like asking:
Of course, the answers will depend on what model of car you buy. So the answer to your bridging finance questions depend on the property you want to buy, what you intend to do with it and your current situation. There are a few basic facts that will give you a ballpark view:
Does bridging lend enough to cover the purchase price and the refurb cost? If not then surely you would have to put money in. Or would you have to buy BMV and borrow % of the market value instead of purchase price?
Most bridgers lend 70% of the purchase price, but a handful lend 70% of value. This is great if you are buying BMV, as you can use the discount towards your deposit, but to buy NMD you would need a discount of 30% +.
You would still need to pay for the refurb although some bridgers will lend you money to cover that too, but it is in staged payments in arrears, so you would still need some cash. It may be possible for you to borrow the reduced amount of cash you need privately and bridge the rest.
For example: I brokered a deal last year where the asking price was £350k, a £250k offer was accepted, which meant the bridger lent 95% of purchase price. The refurb cost was £50k, the borrower spent £25k of their own cash then...
I'm viewing a house which has been split into two flats. I believe that the title has not been split. What are the rules for lending on a property like this? I am guessing I won't be able to use a standard BTL mortgage? Anything else I should be wary of for a property converted into two flats?
The first rule on any property divided into flats is to check with the local planners that permission to do this has been applied for and approved. Two reasons for this:
There is an amazing number of these flat conversions that are done without PP, as the owner doesn’t think beyond 'Hey, I can get more rent if I can split it into flats.'
If you can establish it has been used as flats for a number of years you can apply to the council for retrospective PP. Even more amazingly very few vendors actually do this; they just...
This is a little different to the usual questions I get asked, but quite interesting to consider. The windfall could come from a number of sources - an inheritance, some good property deals or - as this questioner suggests winning it!
If you won £500,000, how would you invest it to maximise your monthly cash flow?
The answer you would normally get from mortgage brokers/advisers is to use your cash as 25% deposits, get 75% mortgages e.g. you could buy 5 x £400k properties, put down 5 x £100k deposits; you could of course buy more properties at cheaper prices.
Whilst this would no doubt generate multiple fees for your broker (surely not why they advise it?!) it is also a finite use of your resources. Once you had used up your cash on 5 or 20 properties that's it; granted you should have created a good income for yourself, but your capacity to continue buying is exhausted.
As an alternative you can consider buying one property at a time -...
When we are JVing, what paperwork/agreements do we need to produce/sign? Others have mentioned being a sophisticated investor or an individual of high net worth. How does that translate into any agreement? Do we simply have to state we are one or the other? And what are the definitions of each? I think I need the new JV PS 13.3.
PS13/3 is the FCA placing restrictions on the marketing of unregulated investments to members of the public. Basically it's to control people who they consider unable to be able to work out a good deal from a bad deal
This pretty much covers any investment where the investor stands to gain (or lose) money depending how the investment performs, but is not regulated by the FCA or sold through an FCA regulated financial adviser.
It certainly covers any property deal from selling off plan Caribbean hotel rooms (remember them) to a two-up two-down refurb.
Loans on a specified rate of interest, regardless of whether the project makes or loses money,...
With regards to getting a BTL mortgage, I have been told by people that I need to show that I have the deposit in my account for the last 3 months. My in laws are selling their house for £45k and we have agreed to put this money into property investment. So if my father-in-law put that money into my account, do I have to wait 3 months before I can get a BTL mortgage or have I been told wrong?
Understanding the lender's thinking guides you to the answer.
Your solicitor has the responsibility under Anti-Money Laundering laws to provide proof that your deposit is from a legitimate source but...
BTL mortgage lenders in particular want to determine that you have not borrowed the money and it is really your own cash you are using and you are not trying to disguise the fact you are borrowing from someone/where else.
To that end they often want to see an audit trail stretching back 12 months, not 3. If chunks of money have just dropped into your account within that time, they will...
I’m finishing up a refurb in sunny Coventry. The valuer is going round in about week, any tips to get the maximum value? And has anyone used a home staging company to dress a house & was it worth it?
This is my recommended step-by-step approach:
Getting your own report done prior to the lenders survey is possibly the biggest influencer.
This is the 6 step process I teach on the Ninja Investor Programme (as well as loads of other smart tips to grow your property portfolio.
I have 3 ex-council flats in concrete blocks with no mortgage on them. I have tried to get a mortgage but cannot find a lender who will lend on them. I want to use the money locked in the flats to buy more property, can you teach me how bridging finance works and if that would be applicable to these flats?
Perhaps it might help if I gave you a few simple facts about bridging finance:
have made an offer on a BMV property? (fingers crossed). I was hoping for a family member to buy for cash, renovate the property and then me and my business partner could buy it with a mortgage getting our cash back out.
Our objective is to recycle as much of our cash as possible as quickly as possible. We are hoping to purchase the property for 85K, spend 10K on refurb and have it revalued at 120K-130K. So our thoughts were if we bought it as a cash purchase in someone else’s name, then remortgage it in our names (personal not LTD) we wouldn’t have to wait 6 months to get our cash out. Does this sound do-able?
So your plan is to use your own cash but pass it to a family member to buy then get it back when they sold it to you, got it.
Two problems in making that strategy work
I often get opportunities offered like this:
I’ve got an Incredible BMV in West London – for a CASH BUYER ONLY. I’ve just got the valuation done via Home track and, guess what? Its worth £716,000!
The asking price is 495,000 for a quick sale and I could get it down to 450k, as it’s a very motivated seller who needs to sell asap. Do let me know immediately if interested.
This is from a property investor who – clearly – doesn’t actually have enough money in the bank to buy the property himself.
However, he is ignoring one very important fact … this property can be bought using bridging finance, possibly with a very small cash input, subject to a bit of due diligence:
On what do you base your value of £716,000?
Is it on the market with an agent and that is the asking price? Or is it just that Hometrack says that is what it is worth; would that be supported by a RICS survey report?