TRUE STATEMENT: Many of our clients have created substantial property portfolios with very little money upfront. The secret is borrowing against the value of a property rather than the purchase price.

This strategy requires clever property buying, by that I mean finding property in the market being sold for less than it is actually worth.  Once you have found such a property, we can help you buy the property with minimal or no deposit. When making a new purchase, you will typically find that lenders will lend a maximum of 85% of the properties valuation or 85% of the purchase price whichever is the lower, this would therefore still require you to part with 15% of your own money, even when buying under value.

However if you re-mortgage a property, they will consider lending up to 85% of the market value. Therefore, if you can somehow turn your purchase into a re-mortgage, you can borrow 85% of the value.

To be able to re-mortgage, you must purchase the property first. We achieve this by arranging for our clients a very short-term bridging loan to buy the property and then the re-mortgage is often completed simultaneously.

In one recent example, the purchase price was £95000, the market value £140000. We were able to arrange a loan of £119000 (85% of the value) which not only covered the purchase price and costs but also left the client with a surplus of nearly £20000 to take on to their next property!

Many lenders have effectively boycotted this strategy by only allowing re-mortgages on properties that have been owned for 6 months or more, however we are still successfully completing deals with around 5 flexible lenders.

If you're interested in such deals then feel free to CONTACT MY BROKER and they'll get back to you in 48 hours.

Ajay.

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Posted on: 26th February 2008 @ 14:07:00