Just Do It: Finance / Mortgage
Article 1: April 2010
Zoe Cairns
Zoe helps clients build their property portfolio and as a Buy To Let Specialist Zoe is able to help all property investors and professionals over the country with all financing needs. To contact Zoe email zoe.cairns@justdoproperty.com Resources |
How not to tie up all your cash in one deal!
We all know how hard it has been over the last few months with the mortgage lenders, changing criteria on a daily basis, tough credit scoring and declining applications for no reason.
BUT, a great product that has entered the market is a fantastic Light Refurbishment Product which allows you to purchase unletable properties with a mortgage rather than tying up all your cash into one deal!!
The Light Refurbishment deal enables you to buy a property at 70% current value, and once works have been carried out they will then lend you 70% of the after works value, a maximum of £25k can be released subject to a successful reinspection from the valuer.
The key is to have your schedule of works you are going to carry out on the property when the valuer comes to do the first survey. The valuer will then be able to make a note in the valuation report as to what he feels the after works value will be from the works you have planned to undertake. Please note that these works have to be carried out within 3 months from completion of the initial advance.
This is a super product that can be used to buy these auction and repossession properties that need some work done on them and are not in a lettable state. As most lenders will not lend on those type of properties. This Light Refurbishment deal is your answer!!!
An example of where it may work:
Auction Property (Probate – needs some modernisation, new kitchen and central heating)
Purchase price - £70,000 (current value)
Afterworks value - £95,000
Works to be done – £5000
We could initially borrow 70% of the current value = £49,000
Deposit needed – £21,000
Cost of works – £5000
After works we can then call out the valuer to reinspect and then raise 70% of the afterworks value (providing the valuer agrees with works carried out)
70% of afterworks value £95,000 = £66500
Which means you are raising an additional £17,500 (£66,500 – £49,000 already raised)
Amount raised £17,500 will pay for your refurbishment costs and £12,500 of your deposit, meaning that you will only be leaving £8,500 in the deal.
Many investors are using this product. Like I said earlier it is great for auction and repossession properties that need some minor refurbishment works carried out.
If you require any more information on the product explained above then please do not hesitate to contact me and we can go over your current deal.
I look forward to connecting with you soon.
To Your Successes
Zoe Cairns
“Zoe Cairns Financial Services is an appointed representative of TenetLime Ltd which is authorised and regulated by the Financial Services Authority”
If you would like to ask Zoe a question click here
