Raising finance as a property investor is unfortunately a requirement for most of us, even seasoned property developers who have made £millions via property over many years still require funding on most projects, there are few investors nowadays with sufficient liquid capital to fund a project from their own resources.
Alternatives to mortgages for funding property development or purchases
Mortgages are not the only sources of funding for property projects but they are the most common. Other methods include raising money via credit cards and personal loans, secured loans on existing property and even venture capital.
Choosing the right mortgage
The right mortgage can make a significant impact on profits over the years, consider that an average mortgage of around £100,000 would cost over £230,000 in total repayments, whereas the best mortgage deal available could shave up to £50,000 from this figure, multiply £50k savings on multiple properties and you can see how important the right mortgage plan can be!
Using the services of a mortgage broker or IFA
Mortgage plans and the associated “small print” are fairly complex, even if you have a good basic understanding of mortgages the sheer variety and type of plans available can be overwhelming, as always our policy is always to seek professional advice wherever possible.
Be careful with properties in need of substantial renovation
Many mortgage lenders will apply a “retention” to mortgage for properties they consider to be sub-standard, this means they will not release all the funds until project is complete and resurveyed – this means another source of short term funding for refurbishment will be required, don’t get caught out by this!