Some people think bridging finance is expensive and costs more than it’s worth. Actually, the returns on your investment far outstrip the costs when the deal is right – and it makes it possible to do things that mortgages don’t allow you to do. That’s where the profits are.
It is always pragmatic to keep an eye on costs, but not to the degree that you become blinkered to the profitability in a deal. If you were looking ta a £40,000 profit to be made in a deal, but a bridging loan would cost you £10,000 in fees and interest, reducing your profit to £30,000; what would you do? Would you walk away or, having overcome your fear of bridging, take the £30,000 profit?
Using other people’s money, joint venturing, often referred to as JV finance is one way of accelerating your property journey, but that usually comes at a cost. JV finance predominately involves giving away 50% of your profit to the person...
I've sourced a 20% BMV deal and am wondering if it’s possible to get an interest only mortgage for the purchase taking into account 80% loan-to-value, so I can purchase with a smaller deposit?
You are on a loser if you want to get a mortgage lender to lend against value and ignore the purchase price - at the point of purchase they never do. It is always the LOWER of purchase price or value.
However, some, but not all, bridgers will lend against the value and sometimes up to 75%, but it is often not quite as simple as that.
One key factor is whether the property is or has been marketed by an agent or not. Using the example of you think the true current value is £100k but you have negotiated to buy it for £80k. If it has not been marketed a bridgers valuer may (but there’s no guarantee) value it at £100k.
However, if it has been marketed and say the asking price was £85k, then valuers would override your idea its worth...
If I buy a property with five flats and then split the titles and try to get 5 BTLs mortgages for the flats: would there be an issue with mortgage providers not being willing to provide mortgages in the same building?
Simple answer - yes. This issue confuses a lot of investors.
I’m seriously considering converting my HMO into serviced accommodation (SA). How easy would it be to refinance it as SA?
Buy-to-let (BTL) lenders invariably require a minimum letting term of six months and a maximum of 12 months in the terms and conditions. That makes short-term lets a no-go area for the mainstream lenders.
Commercial lenders see serviced accommodation as in the same category as B&Bs and guest houses as it uses the same business model. These lenders fall into two group:
Due to the lack of a certain income lenders are nervous about the security of their loan and want some assurance that the income from the property will cover the mortgage payments comfortably.
If you remortgage an HMO lending is straightforward as you have the...
I’m flipping a house after three months, I’ve heard most lenders won’t lend against a property unless I (the seller) have owned it for at least six months!, is this right?
That’s true to a point, but it depends on the lender. A number of BTL lenders impose this restriction on the seller.
However, you shouldn’t really be selling to other investors as they view it as a logical rather than emotional purchase, often not wanting to pay full market value.
Main residence lenders are different, to a degree. There are some that still impose the same restriction on sellers, but it is not across the board by any means.
So your buyers will not have access to all lenders (subject to their circumstances) until you have owned the property for 6 months. The net result of that is they may be excluded from some market leading deals.
The key here from people who successfully sell within 6 months is - transparency. You...
I am looking for some inspiration on a potential property. It is a lovely property that is presently mixed use as a business and flats.
It can be converted to five flats that will fetch a premium price due to the location. The person selling is prepared to listen to options and is prepared to let us develop out the property while she still owns it, therefore, minimal cost to us at purchase.
I have a few ideas myself but am looking for a bit of inspired creativity.
One creative solution was suggested by one of my students who recognised that this opportunity fits one of the strategies I teach on my Ninja Investor Programme workshops.
Through our brokerage, we have financed a number of projects funded exactly this way. So this is not just theory, it works and works well when the number are right.
If you have the current owner’s agreement and permission to enter the property and do the required works to do the conversion, then the delayed...
I’m looking to buy my first house and I have £40K in cash ready to go. Do I:
Or is there a better way?
The argument for buying with cash
At any point in between if you manage to find your next deal and...