How To Use Equity To Buy Investment Property

Using equity is one of the 7 ways (plus a bonus in the video), that I discuss for raising capital to invest in property on my Start Here page.

There are a couple of methods that can be used to extract equity without having to sell, which I talk about in this video:

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1. Remortgage
2. Additional Borrowing
Have you already considered using equity to start property investing? Would you do it, or would you prefer to raise funds another way? Please let me know in the comment section below as I would be interested to see your thoughts on this.



The Power Of Leverage Explained

Leverage is a powerful wealth creation tool, and with the help of some simple pictures, I explain all in this video:

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I discuss:
1. Buying without leverage.
2. Buying with leverage.
3. My views on good debt.
If you have some experience with leverage and would like to add something, or if you are new to property investing and have some questions, please leave a comment in the box below.



How To Find The Best Mortgage For Your Property Investment

Ok, so you have your deposit, or maybe you are wondering what size deposit you require based on the price range of the property you want to buy.  It’s time to look for a mortgage!

Now, it is easy enough to look at the types of mortgages that are available by jumping online and searching through Google.  There are hundreds of mortgage lenders, who all have a number of mortgage products offering different interest rates, fees and terms, resulting in thousands of mortgage products.

You will see some very attractive interest rates and loan to values (here comes the but), but, it’s not until you drill down to the finer detail that you may find the mortgage will not meet your needs or that you will not be eligible for that particular product.  Using a mortgage broker will help elevate these problems.

Instead of shopping for a mortgage, I recommend shopping for a mortgage broker and a broker that specifically deals with Buy to Let (BTL) products and is also an investor themselves.  Any broker can tell you that they can find you a BTL mortgage, but if they primarily deal with residential mortgages, they are not going to have the same amount of experience and knowledge as a broker who solely deals with BTL’s, and you may end up with a mediocre product to fit your requirements.

Brokers will receive a commission from the lender for selling their product and they may also charge you a fee, but don’t let this put you off.

I met my broker at a property auction a couple of years ago and her fee is £500 which is paid once the mortgage lender has released their funds and I have control of the property, known as completion.    She has years of experience, knows my immediate and mid term plan and is always at the end of a phone or email when I have a question. She is a mentor to me and is worth every penny!

I won’t divulge her information here, but if you are struggling to find a reputable broker, please send me a message and I will give you her contact details.

Once a lender has been matched to your needs, an application in principle (AIP) will be written and it’s time to fine tune your research data before arranging any viewings.

Is there something you would like to know about mortgage brokers which I have not mentioned?  Or do you have any feedback about this post?  If so, please leave a comment below.  Thanks.


7 Ways To Raise A Deposit To Invest In Property

Saving a deposit to buy an investment property can be hard and time consuming.  It is also the first obstacle we can encounter when wanting to invest, so it is important to recognise the many options that are available.  I am not providing financial advice here, I am simply highlighting ideas that people consider to help speed up the process:

1.  Personal Savings and Investments – If you have savings or matured investments, the chances are you can increase your return on investment (ROI) by transferring those funds into bricks and mortar.

2.  Pension – Withdrawing a lump sum from your pension may give you enough to get started and some withdrawals can be tax free.  I did this with my Armed Forces pension to help me expand my business.  The introduction of new legislation which started in April 2015 will help many people.

3.  Equity – If you already own your own home you may have equity which you can extract to get started.  This is how I got started, although I sold to release the equity when I moved into service accommodation.  You can do this without having to sell your home.

Methods often referred to as using Other Peoples Money (OPM)

4.  Unsecured Borrowing – Using a personal loan and/or credit cards.

5.  Bridging Finance – This is a short term loan usually up to 12 months, but can be more, and some lenders will provide a 100% financing for the purchase and refurbishment works of a property.  The loan is secured as a second charge to an existing asset, i.e. your home or other investment property which you control, and is generally more expensive than a mortgage.

6.  Inheritance – Often the result of a very sad situation, but investing your inheritance will add to your legacy.

7.  Gift – From family or friends which can also be returned at an agreed time with interest.

Due to money laundering regulations and guidelines, you will need to declare where your deposit has come from.  Some lenders accept sources which others decline, so it is important to declare your source of deposit from the start when approaching any lenders.

Have you considered buying or have you purchased a property using any of the methods above? Or have you used an alternative method?