Need to raise funds for third property

  • Filter
  • Time
  • Show
Clear All
new posts

  • Need to raise funds for third property

    Im after some ideas on how to raise funds for a third BTL. I bought my first property in 2002 (which I lived in for 2 years), I bought it on a normal first time buy mortgage and later obtained consent to let. In 2011 I bought another, again on a normal 90% LTV mortgage, which I lived in temporarily, and now renting (HMO).

    HMO has proven quite fruitful compared to my first property where the whole house is let to a family. I'm toying with the idea of obtaining another house and let as HMO, the problem is how to raise necessary funds with most BTL mortgages only offering 60-70% LTV.

    Some rough figures:

    Property 1
    Market value 110k
    Mortgage: 84k

    Property 2
    Market value £140
    Mortgage: 106k

    Ideally Im looking to purchase one for around £130k, any help would be appreciated.

  • #2
    Realistically, I don't think you have enough equity to play with. A mortgage broker may tell you different but beware of excessive interest rates and fee's for higher LTV mortgages.


    • #3
      You are already over 75% LTV on those two so you won't have enough headroom to capital raise for the deposit unfortunately.

      You may also want to check how long those 'consent to let' approvals apply for, if they are both investment properties you need to advise the lender as if they get wind of it, they could pull the loans. Doing it once, and having a good reason to let it out tends to be acceptable but having done it twice now be careful.


      • #4
        I don’t tend to use brokers, prefer to apply directly. I forgot to mention in my post that I have a £15k deposit. That only equates to around 11% of the purchase price. So would you say its best to wait until I can put together a 25% deposit for a BTL? (Means another 3 year wait).

        CFAproperty- The first consent to let that was agreed, come with preconditions which I have met, on the second one they’re not as flexible and have asked me to convert to a BTL mortgage at the end of my fixed rate period which is Jul-13. Hopefully I should be able to do this very easily as it’s around 75% LTV with a slightly favourable valuation.


        • #5
          I doubt capital values are going to increase much over the next 3 yrs (personal opinion) so saving hard for a larger deposit shouldn't leave you behind.

          Bear in mind that if this second one is an HMO (either licensable or not) a lot of B2L lenders won't want to support you


          • #6
            Think I might have to save, shame really as the property I was looking at is currently yielding 9% with a HMO conversion I think I can double that.

            I know HMO mortgages are harder to come by and the arrangement fees amount to “daylight robbery “. Any ideas why that is? I can’t see any added risk for a HMO, any more than say a family of 4-5 living in one house.


            • #7
              HMO's are more risky to a lender because of the extra 'management' costs and responsibilities that come with them. They will always view how they could manage the property if they were in a default/possession situation.

              The other factor is that the property itself isn't usually granted the HMO license it is the 'Fit & Proper' person who manages it, so if you are no longer at the helm maybe the bank lender won't be classed as such.

              As to fees, I disagree that they are higher than B2L lenders, because we fund most HMO's commercially and their fees are often lower than the residential investment ones.


              Latest Activity


              • is it better to pay off mortgage or buy a few more ?
                I owe £49000 on my btl.I have £70000 in the bank .I could pay off mortgage or I could put down 2 deposits on 2 more buy to let's if I purchased around £80000 and I would still have money left over.Could I have some advise please or what would anyone else do ? .In my opinion buying 2 more would be...
                21-07-2017, 07:22 AM
              • Reply to is it better to pay off mortgage or buy a few more ?
                You unfortunately bought close to the market peak but 20% is still a long way from 50% down. And there are still 11 years to go from the over two decades suggestion. Plus it is your residential property, presumably bought for very different reasons than investment property.

                (I'm not buying...
                21-07-2017, 12:34 PM
              • Reply to is it better to pay off mortgage or buy a few more ?
                Not all that unlikely. My personal residence has fallen by comfortably over 20% in real terms over the past 9 years. Remember as well that the general market trend is no good to the individual if the individual is the outlier - and someones property has to be the outlier!!

                However I agree...
                21-07-2017, 12:15 PM
              • Reply to is it better to pay off mortgage or buy a few more ?
                Since you are looking at spending £80k I assume you will be getting decent returns. So if you lost your job your BTL(s) would provide an income.
                I am struggling to imagine what sort of repair could cost £25k on a £80 property and would not be covered by insurance.

                First I would...
                21-07-2017, 11:36 AM
              • Reply to is it better to pay off mortgage or buy a few more ?
                He would be paying around £250 pcm, easily covered by the rent. If they went to 10%, he'd still be covered.

                Possible but highly unlikely and he doesn't necessarily have to sell then, the mortgage is in nominal terms being paid for by the rent.

                21-07-2017, 11:29 AM
              • Reply to is it better to pay off mortgage or buy a few more ?
                Exactly right.

                Has OP worked out what would happen to him if mortgage rates went up to 6%
                property prices fell 50% in real terms over the next two decades
                we have several more bits of lettings legislation, rent caps and a Corbyn Government who thinks they...
                21-07-2017, 10:24 AM
              • Reply to is it better to pay off mortgage or buy a few more ?
                Couldnt agree more!! It completely depends on what YOU think is going to happen in the medium term, and what YOUR risk appetite is, as well as your personal circumstances.

                For what its worth - I personally would pay it off, as I wouldnt be buying more BTLs in the current market and with...
                21-07-2017, 09:12 AM
              • Reply to is it better to pay off mortgage or buy a few more ?
                It depends on what you are trying to achieve and over what time scale and the income and costs involved.

                There isn't a right answer to that question.
                21-07-2017, 09:05 AM
              • Residential Remortgage, Consent to Let and Purchase of New Build
                I have a complex situation I would welcome some advice on. I have stumped my two mortgage broker so far. Any ideas/tips would be most welcome. The scenario is;

                My wife and I currently own outright a property worth £410k. We are looking to release equity in order to purchase a new build,...
                15-07-2017, 21:27 PM
              • Reply to Residential Remortgage, Consent to Let and Purchase of New Build
                Sometimes, you get the feeling that some brokers sometimes, use smoke and mirrors, to make it more complicated than it seems so you are happy to pay their fees, because they have been able to turn your 'difficult' situation around....
                20-07-2017, 20:41 PM