Nervous lenders in their droves have been introducing a rule that means you are unable to re-mortgage your property or borrow more against its value until you have owned the property for at least six months. This effectively means you will be unable to access any extra capital you create in your property until the 6 months pass, potentially slowing the growth rate of your portfolio

This can be a problem for the following types of purchase:

•   Buying a property that needs refurbishment
•   Buying a property under market value
•   Buying a property with cash for speed, say at an auction

For example, if your strategy is to buy a property that needs renovation, and you were anticipating going to the lender when the work is complete and asking to increase your borrowing based on the increased value, you may have to wait the full six months before extra money can be released. If you are thinking, ok I’ll re-mortgage away from this lender to a new lender based on the higher value, the new lender will check when you originally purchased the property and if it was less than 6 months ago, they may refuse to lend you anymore than the sum you originally borrowed!

We are keeping a very close eye on this market and know which lenders operate 6 month clauses and more importantly the small number that don’t. If raising more money on your property in the first 6 months is important to you, don’t tie yourself into the wrong lender!

To find out more SPEAK TO MY BROKER

Ajay

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