Property Investment Finance

How Do I Go About Raising Property Investment Finance?

When considering whether or not to invest in a property, there are a number of finance options and factors to take into account.

There is so much variation when it comes to investment property financing.

It is important to take the time to consider the best finance option for you so that you can get the most out of your investments.

Hunter Finance specialises in short-term property loans, and our team of financial lenders are always here to discuss your intentions, finance options and eligibility.

Call us today: 01825 749 721.

Should I finance an investment property?

Becoming a landlord can be an effective way of generating a steady flow of passive income, but getting started does require you to put down a large sum of money, and when you don’t have that money upfront, an investment property loan may be the easiest option.

What are our options?

Conventional Bank Loans

If you already own a home, you are probably familiar with conventional bank loans and financing options.

• Conventional bank loans require a down payment of 20% of the property’s purchase price. This is slightly higher with an investment property – the broker will require a 30% payment.
• Your eligibility for a loan, as well as the particular interest rates applied, relies on your credit score and history, your income and any existing assets.
• Most financial lenders will require you to prove that you have at least 6 months’ reserved to cover both mortgage and rental obligations.

Fix-and-Flip Loans

This is a short-term, hard money loan that allows the landlord to renovate the home and put it back on the market in just a short space of time.

• A hard money loan requires an easier application process than a conventional mortgage because it focuses primarily on the potential profitability of your property.
• This type of loan allows landlords to receive all profits in one lump sum when the house is sold.
• The fix-and-flip loan, however, is not cheap. Interest rates can be as steep as 18% which, in turn, can impact overall returns.

Home Equity

A third option for raising finance for investment in property is drawing on the equity of your existing home.

You can often borrow up to 80% of the value of your primary property to put towards the purchase of an additional house.

There are two ways to draw upon home equity:

• HELOC (Home equity lines of credit): The borrower agrees a maximum amount to borrow, and works much like a credit card. Read more.
• Cash-out refinances: A longer-term fixed-rate loan which is taken out on a property that you already own. This new mortgage is higher than the money you previously owed on your primary home. Read more.

How can I raise finance?

1. Credit rating is key: Ensure that your credit rating is as clean as possible. This will encourage lenders’ willingness to help you out.
2. Are you eligible for a mortgage? You will need a minimum annual income of £25,000. How many properties you have will also influence how much brokers can lend to you.
3. How much can I borrow? How much you can borrow is dependent on your rental return. Learn more here.

For over a decade, we have been helping shareholders climb the property ladder with our financial solutions.

Enquire now or discuss your eligibility for a loan today by calling us on 01825 749 721.

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