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Good day. I currently have a residential BTL with good tenants in who are reluctant to leave.However i have been offered a good investment opportunity (residential BTL) with far improved returns.It is about £200k and has three distinct living spaces. Inspired by rich dad, is there a way of effectively 100% financing the new opportunity for a few years until the tenants leave and I sell their rented house? The current rented house has 30% equity currently which amounts to £40k.Any help welcomed.
No lender will knowingly finance 100% of a purchase. They typically like to see a minimum of a 25% contribution from the borrower. If you speak to a broker, you may be able to leverage against the equity in the current property.
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**
Your question is not whether 100% financing / leveraging is the right thing to do, or whether you should buy the new property in a personal name or Ltd Company structure - no doubt some people on PT will offer their thoughts on this - but whether there is a way to fund 100% of the purchase of your new property.
Yes .... possibly.
By spreading the required 100% funding across your current and new property, you could potentially raise all that you need (possibly even more, for stamp duty, legal costs, profession fees, valuation charges etc too).
Using the eligible equity in your current property and then the balance secured on your new property, the overall eligible equity between the two could provide the solution for you.
How this will work specifically for you will be based on values, rental incomes, personal tax status, income, credit status etc etc.
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Hope this helps.
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Unless you have equity to remortgege from other owned property
If you have not got property you will need to self fund deposits min 25% plus all the costs
Lenders cant play the old game anymore and a lot of RDPD is out dated in the UK
In short you need cash and lots if you want to play the big game
and dont forget leverage works well with property inflation
I dont think we will see property inflation anywhere near the past 20 years
and if we had a crash it could wipe out all of the equity you have invested in the short term
My own plan is to buy on a yield of min 8% introduce 25% in cash to do the deal and then use Capital and Repayment to pay down debt
This alone is very different from RDPD
RDPD depends on Capital Growth working if its not there you will struggle with high LTV if Interest rates rise
Belt and braces good cash deposit good yeild and pay down your debt with Capital and repayment
also you need to look at your tax position S24 also works against RDPD
so you may have to use a company which in no way is as tax efficient as personal BTL.
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.