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doing no money down deals with EVERY lender

There is a way you can use every lender to do no money down deals.  There really is.  It relies on getting a bargain property but you can use every lender out there to do it.

 

Most (but not all) employ a 6 month rule.  They state you cannot remortgage a property within 6 months of ownership. 

 

So all you have to do is buy the property for cash and own the property for 6 months and then remortgage.

 

I can already hear you say “but I do not have the cash!”.  I know, I know, nor do I!

 

However bridging companies do.  They are happy to lend on bargain properties 100%.  A bargain property to them is:

 

30% below a surveyor’s valuation.  So if you can get a property for 70% of its value then they will lend you 100% of the purchase price.

 

The problem is they charge top dollar for the finance.  To be precise 1.25% per month.  Now before you think this is a rip off think again.  You just have to do your sums.  If you have to hold for 6 months you need to pay out a further:

 

6 x 1.25% x 70%  = 5.25% of the purchase price.

 

So if you got the property at a 35.25% discount then the property would be a no money down deal.  This is because you would buy a £100k property for say £65,000, pay £4,875 in interest but then remortgage out at £70,000 6 months later. 

 

Now I make a very big assumption here.  The property will still value up at £100k in 6 months time.  This is your call.  I reckon they will but you could get caught with your trousers down if prices fall. 

 

So if you buy 40% BMV you have no fear of buying no money down whichever method you use.

 

If you want help with finance talk to our in-house broker Lynne who will guide you through the maze of no money down investing.

 

Ajay

 

 


Posted on: 10th Jul 2009




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