Buy to Let Opportunity
Discussion
Can anybody give me some finance advice? A colleague and I have been given a very good opportunity to buy a 3 bed semi near us at a very good price (we have had a RICS valuation and we would be paying approximately 30% under a conservative estimate in today's market).
I need to raise about £50k short term to purchase, and then intend on getting a BTL to try and cover back the entire investment minus renovation costs (ie we want to mortgage for £100k to get back our 2x £50k stake).
I am not keen on remortgaging my existing property (but will if I have to) which currently has mortgage of approximately 60 - 65% of it's value - would like to avoid this if possible.
If we do a straight deposit and mortgage for Buy to Let it will leave us both fairly skint (albeit with what we have weighed up as a good pension booster) - and buy to let mortgages want about £2k a time - is the other option to mortgage at 75% based on value then ask for additional equity release once renovated (assuming that 75% following renovation is then higher than first borrowing)??
Would be good to keep responses down to how to get the funds rather than if it is a good idea to buy property or not right now - we have both spent a lot of time deliberating and both feel this is the right thing for us to do.
I need to raise about £50k short term to purchase, and then intend on getting a BTL to try and cover back the entire investment minus renovation costs (ie we want to mortgage for £100k to get back our 2x £50k stake).
I am not keen on remortgaging my existing property (but will if I have to) which currently has mortgage of approximately 60 - 65% of it's value - would like to avoid this if possible.
If we do a straight deposit and mortgage for Buy to Let it will leave us both fairly skint (albeit with what we have weighed up as a good pension booster) - and buy to let mortgages want about £2k a time - is the other option to mortgage at 75% based on value then ask for additional equity release once renovated (assuming that 75% following renovation is then higher than first borrowing)??
Would be good to keep responses down to how to get the funds rather than if it is a good idea to buy property or not right now - we have both spent a lot of time deliberating and both feel this is the right thing for us to do.
Regarding your suggestion of obtaining a Buy-To-Let mortgage and then obtaining additional funding on the property.....For a property purchase a lender will always base their lending amount on the lower of the purchase price or valuation. However, there are a few lenders who will allow you to obtain a Further Advance once your BTL mortgage has completed (lenders often want 6 months ownership before this is considered and [assuming no value is added via refurbishment etc] many lenders are reluctant to allow this because if the true market value is higher than what was paid for the property then why couldn't the vendor achieve this).
However, Cheltenham and Gloucester will consider a Further Advance once your first months payment has been made. They say that they will value the property at market value for the Further Advance (valuation fee paid for by C&G) and that they will ignore what you actually paid for the property and assess the Further Advance on true market value (C&G's arrangement fees for a BTL would be c. 2% of amount borrowed).
Hope this helps
However, Cheltenham and Gloucester will consider a Further Advance once your first months payment has been made. They say that they will value the property at market value for the Further Advance (valuation fee paid for by C&G) and that they will ignore what you actually paid for the property and assess the Further Advance on true market value (C&G's arrangement fees for a BTL would be c. 2% of amount borrowed).
Hope this helps
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