How to source the finance needed to invest in property

FINANCE

The UK housing sector has been doing pretty well in recent times. This is apparent in cities like Birmingham which has seen a growth in property prices of almost 30% in the last five years. Other cities and towns in the UK have experienced similar figures, with Liverpool seeing an almost 25% growth in prices over the same period. Although Brexit may have some impact on the UK housing market, many still believe that property investment is one of the best places to put your money.

If you are just starting out on your journey as a property developer, then there are many things to consider. The prime factor for most property moguls is finding the financial help needed to buy the property you have identified as a good investment. After all, you will probably not have all the money available to finance the whole of the purchase from your own capital. So just what are the best options for property investors?

Finding the finance needed to invest in property

Whether you are buying a £150,000 house or a £1 million country mansion, you are very likely to be looking for ways to get the cash together to complete the purchase. Here are some of the most popular and accessible methods around.

  • Specialist P2P lending platforms – before you go straight to your local bank, consider this route first. Specialist property peer to peer lending platforms now exist online to help you borrow the money you need. This can often be quicker and more accessible than trying to obtain a mortgage from your bank. Some UK developers use Lendy, a P2P lending platform which specialises in property deals. Through them you can access a whole range of loans depending on the project you are undertaking and get the money needed to complete the purchase. As with a normal loan, you pay the money lent back with interest on top over the period of the loan.
  • Crowdfunding – if you want to take a slightly different path then you could consider crowdfunding via one of the many popular online platforms. This means that a group of people will invest in your project rather than simply lending you the money to pay back. In return, they would get a stake in the property or would be paid a percentage of any rental income.
  • Direct investment – another way to find the money for your next property purchase is via an individual investor. Although the principle is the same as crowdfunding, it works in an entirely different way. This sort of investment is negotiated with one investor and not via specific online platforms. Although you can use the internet to help find investors, direct investment is usually a more personal process with the investor actually wanting to meet you and track any progress along the way. The usual deal is that they will put up the money you need for an agreed percentage return on the eventual sale afterwards or a portion of any rental income.
  • Mortgages – for many UK property investors, this will be the method they immediately turn too. It is easy to see why as it was always the default choice for many until recent years. It involves heading to your local bank or building society and arranging a loan from them to buy the property. The great news for investors is that most banks offer a wide range of specific mortgage deals to cater to your individual needs. From buy-to-let schemes and beyond, it is still a route worth considering. A deposit will be required by the lender and the more you can raise the better. That is because the higher the deposit the better will be the deal you secure with the lender.
  • Family or friends – if you only need a relatively small amount to help buy the property or have a wealthy family member that is happy to assist, why not think about borrowing from them? This avoids you taking on any official external debt and also is usually a lot simpler than arranging something like a mortgage. It will also give you more flexibility in terms of repayment terms.

Invest in property with the right financial help

Before embarking on property investment you must have the necessary financial arrangements in place. If you are looking for the best ways to source this finance, then the above tips should help. From P2P lending to a traditional mortgage, there are several different options to consider.

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