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. 

Interest Rates rise to 0.75%

The Bank of England has raised the interest rate for only the second time in a decade. The rate has risen by 0.25% to 0.75%. The Monetary policy committee lifts cost of borrowing to highest level since 2009 The move will increase the interest costs of more than three-and-a-half million residential mortgages that have variable or tracker rates. But it will be welcomed by savers, who could see a lift in their interest rates over the coming months.   An extra 0.25% interest will add £12 a month to a £100,000 repayment mortgage and £25 on a £200,000 loan. However, nearly 70% of homebuyers have fixed-rate mortgages, so will be unaffected. I have a variable rate mortgage. How much more will it cost? If you are on a tracker mortgage that matches any rise in the base rate, then an extra 0.25% adds £12 a month to a £100,000 repayment mortgage...
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Solving the property puzzle

  The growing proportion of UK wealth tied up in property means your house can easily end up benefiting the Treasury – instead of your children. The recent TV adaptation of E M Forster’s Howards End was simply the latest in a long line of screen dramas whose plot turns on the contents of a Will. It is little wonder dramatists keep returning to the topic; passing on property to the next generation is rarely straightforward. The sharp rise in property prices over the past decade has only served to aggravate matters. For many families, their principal residence is likely to be their biggest single asset, and to attract hefty taxes and other charges each time there is a change in ownership. As a result, retirement downsizing can be expensive, and it can be all the harder to release capital for the next generation. “There can be a sense of frustration...
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Government Review need for Capital Allowances!

In 2017 The Chancellor of the Exchequer tasked the OTS (Office for Tax simplification) to review the need for Capital Allowances, and whether we should change to using Accounting depreciation when Simplifying tax relief for tangible fixed assets? Their report was published a couple of weeks ago. Having sought consultation from a number of different stakeholders, the OTS concluded that:- “If we were designing a system to give relief for capital expenditure of this kind from scratch, depreciation could work perfectly well and would make a lot of sense. However, our analysis has shown that the undoubted simplification benefits would not be worth the disruption of the wholesale upheaval involved. As only 30,000 businesses claim capital allowances in amounts exceeding the level of the Annual Investment Allowance, we consider that the focus should be on improving the existing system.” In short, Capital Allowances are here to stay. Contact Arthur to...
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‘Staycation’ boom offering opportunities for holiday let investors

Landlords and property investors are taking notice of a growing trend of the Great British ‘staycation’, with a number of them looking to rent out holiday properties on a short-term basis. On the back of good weather last year – England and Wales had the warmest spring since records began in 1659 – the number of domestic trips increased by an estimated 4.7% to 58.5 million, according to new research, while expenditure is estimated to have risen by 6.2% to £14.1 billion. Fergal McGivney, senior travel analyst at Mintel, which produced the British Lifestyles report, has predicted a “slight reduction in the growth of overseas trips as some consumers opt for staycations” this year, because of the subdued growth in wages and continued Brexit uncertainty. Meanwhile, tourism chiefs at ABTA have reported that the Norfolk Broads, the West Country and the Cotswolds are proving to be popular destinations for domestic...
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Landlords grow their buy-to-let portfolio through a seven-day second charge loan

  The directors of an investment company, who own nearly 250 properties, are set to grow their portfolio after Together delivered funding secured against part of their buy-to-let empire – in just seven days. The lender provided a second charge loan over 26 of their rental homes, worth £3.5 million, and owned by the high net worth customers, who run their property portfolio through a limited company structure. The three investors, two who are self-employed directors of the property business, wanted to keep their favourable interest rate on the current first charge buy-to-let mortgages on the portfolio of properties across the North of England, which they bought before the financial crisis of 2008. However, the customers wanted to unlock the equity they had built up over the past decade through a second charge loan, and wanted the deal to complete quickly so they could press ahead with adding to their...
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