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How do I raise finance?

The question that is asked all the time by property investors is - how do I raise the finance to begin?  If you are starting from the great perspective of having a good chunk of capital or you are able to release equity from a property to work with when you begin to buy property; then that is great. 

It makes the process much easier as it gives you the confidence to know that any offer you make is backed up by funds in the bank and therefore offers you greater bargaining power.  Coupled with the right knowledge and guidance, it also means that you can start your search sooner rather than later and get going on your chosen strategy.

Raising Finance

If you are trying to raise finance, then it would be a good idea to check your credit rating and mortgage status.  Speaking to a mortgage broker who specialises in lending for investment purposes about your ability to raise a mortgage would be a good place to start to see if you’re at least in the running in this sense. 

Regarding raising finance for the deposit or to buy outright, this can be a tricky subject.  There are a number of ways in which you could pull money together and we have listed them below:

  • Credit Card (short term)
  • Borrow money from relatives or very close friends
  • Borrow money (in the form of a loan) from friends or acquaintances
  • Raise Bridging Finance (in a number of different ways)
  • Bank Loan
  • Angel Investor/High Net Worth Individual/Sophisticated Investor
  • Vendor Finance (in certain circumstances)

 Check out our commercial finance and our mortgage section for more information on raising finance. 

100% Finance Case Study

 Our property developer client agreed to buy a run-down property in a well-established residential area in North Manchester. The previous owner had moved into a care home, and an agreement was struck with the family to buy the property, before it went to market. The property was in need of a full refurbishment, but was structurally sound.As the vendors wanted a quick-sale, they accepted an offer of £205k on the understanding that the purchase would be concluded within a month. The developer was comfortable with this, having used bridging finance before and therefore being familiar with the process, and importantly how long it would take. Headline Deal Figures are:Offer - £205KOpen Market Value - £295KLender funded 70% of OMV = 100% purchase priceRefurb - £40KNew Asking Price £349,500Given the client knew he was getting a good deal, but wanted to keep his cash contribution down to a minimum, we suggested a...
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Beating The Buy-To-Let Tax Changes

Any buy-to-let investments are now subject to a new, higher form of taxation. If you are one of the landlords affected, will you be able to cope with the new tax increases? In short, the changes mean that it is no longer possible to offset your mortgage interest against your profits and by 2020 none of the interest will be tax deductable. The result of this is a higher tax bill for many landlords across the UK. Taxation Changes The new rules only apply to private individual landlords, so those who own properties through companies should be unaffected. The changes to the rules mean that if you are one of the higher-rate tax payers, it is no longer possible to offset all of your mortgage interest against your rental income. If that income has not increased then you are likely to be hit with a higher tax bill. This is...
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What the New Tax Changes Mean for Landlords

As most of us in the residential property investment sector are already aware last Thursday saw the introduction of the first phase of a new government tax move to penalise landlords. Legislation cutting tax relief for higher earning landlords (those earning more than £40,000 per annum) will be phased out gradually over four years and replaced with a standard 20 per cent tax credit. Before April 6, higher earning landlords were able to deduct mortgage interest payments of up to 45 per cent from their tax bills. Like the 3% Stamp Duty on BTL and second homes, the new legislation is intended to hurt landlords in the pocket. And certainly, for some landlords, they’ll be paying more in tax than they make in profit. That’s because they’ll be charged on their full rental income (rather than just profit). Investor Steve Bolton, who led – and lost - a court challenge...
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How can landlords understand and cope with mortgage interest tax relief changes?

  Unless you have been living under a rock recently, you should be aware of some imminent alterations to mortgage interest tax relief. The changes are set to come into force this week (April 6th) and are sure to have implications for buy-to-let landlords and tenants alike.But just what is changing and what can investors do in order to cope, ultimately maximising their returns?Ryan Weston, of Just Landlord Insurance Services, explains:What is changing? ‘In the Summer Budget of 2015, then Chancellor George Osborne announced plans to alter how mortgage interest tax relief is calculated by buy-to-let landlords.Presently, landlords can cut their taxable income by deducting the cost of some expenses. These include letting agent fees, mortgage interest and repairs. Under the new legislation, landlords will still be able to deduct those costs, but cannot offset the cost of their mortgage interest from their rental income when working out profits.  Instead,...
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Let It Be?

New rules on tax relief and loan affordability being implemented in April will hit the profits of many buy-to-let investors.It has been a strong decade for UK property prices and rental incomes. Despite a marked dip in the second half of 2016, rental prices have still risen by around 30% since 2010. (Back in mid-2016 that figure was closer to 40%.1) Low interest rates and regulatory tailwinds have encouraged many landlords to increase the number of buy-to-let properties they own, while the UK’s economic and jobs recovery has helped to keep rental demand buoyant.Yet the tide appears to be turning. New rules due to be implemented from April will phase out higher rate tax relief on mortgage interest for buy-to-let. The maximum relief for higher rate taxpayers will ultimately fall to 20% in 2020.2 The impact of the drop may be substantial.“The tax changes that will start taking effect from April...
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