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Can you legitimately achieve a "No money down" purchase (save for SDLT and legal costs) as suggested by many "property gurus"?
I've been told that it can be done if you can source properties at 25-30% BMV then obtain 75% LTV mortgage against the full market value, effectively giving you 100% finance.
Can this be done legally? I thought land registry needed to be notified of actual price paid? Could you get around it by saying that you've paid full value but give the vendor the 75% and then pay the vendor in instalments for the rest meaning you really are paying full price, just not in one go?
No! No! No!What you are proposing is mortgage fraud.A property will be valued for lending purposes at the purchase price or the market value, whichever is the lower.Non disclosure to a lender is mortgage fraud.This is a serious offence. People have gone to prison for it.Who has been suggesting this is possible? If you could do this, why would the guru sell what amounts to the six numbers to the lottery for £297.00?Wouldn't they be too busy buying no money down deals?Please do not listen to this utter bullsh*t. You are being sold a ticket to see a Unicorn.Forgive my frank response and language, but to read that newbies are being sold a lie makes me angry!
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
What "property gurus" and where did you see them advertising?
"Change is a prerequisite to longterm survival".
The establishment is rigged so that the rich stay very rich, and the poor get poorer.
That's what I suspected but thought I'd check here with the possibility of an answer from someone with a legal background. I wondered if I was missing something...a legal work around.
The story/case I linked to was the exact structure you are proposing. The perpetrator of the fraud went to prison.I would like to know the name of the guru who is saying this.Also, the use of the word "work around" is often guru-speak for another way of trying to get something past the lender by dancing in "grey" areas, and would be regarded as fraud.Do not under-estimate the serious nature of what you say you are being told. It is a criminal offence. It is very irresponsible for anyone to be teaching this to newbies.If caught out, even if you did not get prosecuted, you would be black-listed from any further lending and your property investment career would be dead in the water.The lenders share intel via the Hunter List for anyone who has defrauded them and you would be black-listed.
As Vanessa says your suggestion is very wrong. The you (and your Conveyancer) has a duty to disclose the Purchase Price to the Lender. They will base the LTV off of this figure.Why would a lender want to lend on the "perceived value" if you have demonstrated that to sell the property the vendor had to do it 20-30% BMV?They too on repossession will be thinking this would be what they would get.
#1 You can do "rent-to-rent" in which you become the controller (not the owner) of a property. With no SDLT to pay too.
#2 Some people call using equity from another property as the deposit as "No Money Down" but it is not. Equity is Money.
#3 You can do "no money left in" you can get this with renovation projects. Where you purchase on bridge a "bad" property to renovate it and increase the value. When you remortgage you may release the "increase in value" therefore getting the initial investment back. (Very hard to achieve.)
#4 I hate this phrase but you can use "Other Peoples Money (OPM)" that may be family member or enter into a "Joint Venture" with an investor. So you had NMD as the Investor put there money in, for exchange for you managing the project? etc..
So out of them #2 is a relay good way to do short-term investments - the Buy-To-Sell type things using your equity in another property as security (for deposit) to fund another property purchase. #3 is everyone's favorite but increasing the value of the property to the amount you have invested is very difficult you wont do so with a new kitchen and a lick of paint. #4 is fine if done ethically and correctly. The issue is investors often loose a lot of money this way if the JV partner mismanages a project.
_________________________________________________________________________My posts are not financial advice, just a rambling guy passing time on a coffee break.The team at Bespoke Finance offers advice, including Limited Company Buy-to-Let , HMO Conversion and Cheap Life Insurance._________________________________________________________________________
The total opposite is needed today
a good size deposit and where it came from is the order of the day
The days of when a Investor could start with little are over
If you are coming into the PRS today you need a lot of cash
Poor Landlords need not apply in 2018
Learn Change and Adapt ?????
All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.
Once upon a time (years ago) you could buy off plan houses and before the house were completed you could sell for a profit.
Once upon a time you could borrow up to £25k in the bank for a deposit for a house
Once upon a time you could borrow without proof of income.
The market is really changing and fast. The above is no longer possible.
I have purchased a few properties at auction with cash and then mortgage when done up the place and it is extremely difficult to get all your money back when you get a mortgage 6 month down the line.
BTL is NOT easy anymore and is expected to get harder
seems the new btl is now being a 'property guru'. its unbelievable the number of gullible wannabes happy to hand over large sums in return for a dream (lie)!
I call them Under The Hammer Landlords
we have quite a few on here talking about the easy riches
Mind That's before they have even purchased a Property ?
Then they get into the Game and realise its not quite as easy as they first thought
there was some fool on tv a few days ago who lost all his money on a house bought at auction hundreds of miles from where he lives. obviously he had never visited it and dint know only druggies would live there.
however he couldn't understand how he came a cropper as he said he had done lots of research, watching HOMES UNDER THE HAMMER!