June 4th, 2017. Ben Lloyd
How to Fund Additional Investment Properties
Considering buying an additional investment property? How are you going to finance the purchase? If you don’t have enough cash to buy a property outright, then you’ll likely need commercial finance.
There are a number of different finance options available to you when buying an investment property – here are a few of the most common:
Broaden Your Assets with Buy-to-Let Mortgages
A Buy-to-Let mortgage essentially does what it says on the tin. This is a loan designed for purchasing properties that will be let out and is the most common option for buying investment property.
This type of mortgage will typically require a higher deposit than with residential equivalents (at least 20% will be required) and interest will vary depending on the property’s investment potential, prospective rental income and your own monthly finances.
Secure a Deal with a Second Home Mortgage
Sometimes you don’t want to purchase a property for anything other than living in it when you’re away from home. If it was also a long-term investment, that would be an added bonus.
Second home mortgages are designed for purchasing a home where you will live part of the year. If this sounds ideal for you, expect lenders to require a larger deposit than when you applied for finance for your first home. You will need at least 25% and interest rates will be higher too.
Expand Your Portfolio
If you already own multiple properties, it may make sense to consolidate your debt under one portfolio mortgage.
Portfolio mortgages are designed by lenders for borrowers with at least three properties with a combined value of between £500,000 and £10million. They help merge loans to make managing repayments easier by treating all of your loans as one account. This means, although you may have multiple interest rates, you will receive just one mortgage statement for your entire portfolio each month.
This type of mortgage could come in handy as it not only allows you to mix commercial and residential Buy-to-Let property purchases, but makes lending against your entire property portfolio possible. As a result, you may be able to borrow more than the property’s value thanks to excess rental income or equity from existing properties.
Consider a Commercial Investment Mortgage
You don’t have to run a business to purchase commercial property. Commercial investment mortgages are designed to help individuals purchase or refinance commercial property with the intent of renting it out. This option means you will receive a monthly income to cover the repayment costs, as well as owning a long-term investment.
If this sounds like a solution to your conundrum about how to invest in property, expect lenders to fund up to 75% of the property value.
Need Help Secure Property Finance?
Whatever your property purchase needs, if you need help buying investment property, we can help. Get in touch with our friendly and knowledgeable team to find a competitive finance deal that suits your requirements.
Article By Ben Lloyd
June 4th, 2017
Ben is the Director and Co-Founder of the Pure Group and Managing Director of Pure Property Finance.
Following a career in Barclays, where Ben was in the real estate finance team for 8 years, he decided that the market needed a more forward-thinking type of commercial brokerage so founded Pure Commercial Finance (now Pure Property Finance), the first company within the Pure Group.
Ben has extensive experience across the real estate sector and has participated in over £2bn of real estate transactions during the course of his career.
Ben oversees the general strategy at Pure Group and works with the senior leadership team to drive the Group forward. Ben is also on the Executive Committee of FIBA.See more articles by Ben