If you can find properties for less than £30,000, which I frequently do, I have found a lender that will lend 85% of the purchase price.
This is the first mainstream lender I have come across that offers such small mortgages.
They are expensive, at 8.8% APR, when I took my mortgages out but they do have a discount of 2% for 1 year. So effectively I am paying 6.8% which is still expensive but when you are getting a 14%+ yield on these properties then the profit margin is built in.
The strategy on these type of purchases is to wait for the capital growth (which I reckon will be at least 50% in the year) and then remortgage out at the £30,000+ value at a more sensible rate.
Posted on: 26th Feb 2008