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  • Property-a-holics

    No Money Down

    Hi

    I have read conflicting reports on whether it is still possible to buy property with no money down and would like a definitive view. Is it possible?

    If it is possible does the property have to be BMV? Those of course are harder to find at the moment.

    Thank you.

    Rob
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    Hi Rob,

    I can give you a very simple over-arching answer .... NO.

    Think about it. If you could, wouldn't people who knew about it be buying a property every day?

    The thing is, they're not. They are too busy selling courses and seminars!

    In certain cases, you can use bridging finance to finance 100% of the purchase, but you'd need to be able to afford the bridging fees.

    Even if you could buy without putting your hand in your pocket, I documented 13 costs associated with buying a BTL property.

    BMV = below market value. It simply means "getting a bargain" or "buying at trade prices" but it has been elevated to some sort of mythical status as if it is some sort of Holy Grail and the key to NMD.

    BMV and NMD are not mutually exclusive.

    If you buy a ticket to a seminar showing you how to buy NMD, you'll be buying a ticket to see a Unicorn.

    Please see - 15 things they won't tell you at a wealth creation/property seminar

    Hope that answers your question?!
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    "possible to buy property with no money down"?

    Depends if you class debt as money; it is not unknown to get 100% debt for very short periods. Is debt NMD?

    Their are also loans that are secured on equity in your home. Is equity loan NMD?

    You can buy then increase value of the property and "get your money back" by selling. Is recycling NMD?

    You do need money to make money, in normal course of business NMD does not exist, their are fraudulent routes regarding misleading or none disclosure - avoid!
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    THIS PROPERTY TRIBES ACCOUNT IS NO LONGER USED. DO NOT SEND PRIVATE MESSAGES.

    YOU CAN REACH ME AT BESPOKE FINANCE for HMO Mortgages, Cheap Life Insurance and Limited Company Buy-to-Let on 08009202001

    There are loads of ways to do legitimate no money down deals with equity elsewhere, bridging (for the right deals), JVs, etc but that's not what is usually being talked about which is can I do it with a buy to let mortgage in which case that's not the question that needs asking.

    The question that needs asking is 'is there any deception involved with any of the parties involved in particular the lender?'

    If any of the following occur then it's most likely to involve deception and would be regarded as fraudulent by lenders:-

    - The ACTUAL purchase price isn't declared to the lender or on the application.

    - There is some sort of gifted deposit or cash back arrangement that isn't declared.

    - There's some sort of option paperwork used to create 'equity', deposits, loans, cash backs etc elsewhere down the chain.

    - Multiple solicitors are used to move money between numerous parties with each solicitor claiming they're legit as they're only acting for that party.

    I have seen them all!

    The broker/solicitor/investor always has some great 'excuse' as to why their scheme is legit so I always give the same response; if I call the lender and run this by them that'll be ok then? Funny the answer is always 'no don't do that!'

    As I always say I'm a property investor and 75% of my clients are property investors if there was a LEGITIMATE way to do NMD with ordinary mortgages would I not be the first one doing it!

    Lisa
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    Lisa All comments are for education and information purposes only and do not construe as advice or a financial promotion. No liability is accepted for comments made. If you wish to receive information in an advisory capacity then please contact me about becoming a client. www.keys-mortgages.com


    Are you talking no money down at the start or the end? Take all the spin away and consider this:

    • No lender will give you 100% of purchase price unless you put additional security in
    • BTL lenders work off lower of purchase price or valuation-some bridging lenders don't
    • Your deposit has to be yours-not an undisclosed JV partner

    So NMD on a purchase is only possible with additional security.

    No money left in is different. If you buy for cash or use bridging and refurbish the property then you can remortgage after 6-9 months and if it values up and the rent covers a larger amount of debt then you can get most and sometimes all your money out.

    For the right client and the right property you can get far more out than you spent. A live example at the moment is purchase of land and construction of four flats cost £240k. Valued up at £440k- loan offered from lender £330k.

    Lisa makes a good point- ask the lender if they are OK with a scheme. If they're happy go for it. I too am still waiting for a lender to say it's OK.
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    Regards Simon Searchlight Finance

    Fulfil Your Property Ambitions

    01565 654005

    Searchlight Finance Ltd is authorised and regulated by the Financial Conduct Authority reference 743220.

    HMO Finance I Complex BTL I Bridging Finance I Development Finance

    Buy to Let I Portfolio Finance I Commercial Mortgages


    Rob,

    Two professional mortgage brokers have confirmed it is possible. Not common or likely in most deals.

    Ultimately, the seller needs to get paid. In most nothing down deals, all that is taking place is the money comes from someone other than yourself or you have other assets that can be used to fund the deal.

    Conventional lenders what you to have skin in the game, 'hurt money'.
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    John Corey 


    I host the London Real Estate Meet on the 2nd Tuesday of every month since 2005. If you have never been before, email me for the 'new visitor' link.

    PropertyFortress.com/Events

    Also happy to chat on the phone. Pay It Forward; my way of giving back through sharing. Click on the link: PropertyFortress.com/Ask-John to book a time. I will call you at the time you selected. Nothing to buy. Just be prepared with your questions so we can use the 20 minutes wisely.


    Thanks to everyone for the responses.

    I have a couple of properties bought last October (using TMW) which have risen in value so the other option might to be remortgage to recycle the deposits? Both required a bit of tarting up but nothing major.

    How easy is it to remortgage these days?

    Rob
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    Hi Rob,

    Technically, you do not need to re-mortgage.

    You can apply direct to your existing lender for a "further advance".

    They would re-value the property and release equity up to the current LTV of the new valuation.

    There are not too many lenders doing further advances.

    You could also re-mortgage, but no guarantee you would get the up-valuation you need to release equity.

    Property Tribes Mortgages has some very attractive and exclusive fixed rates with free valuation, so you would have nothing to lose by trying one of those.

    I believe that the first port of call would be to enquire of the current lender if they would consider a further advance - depending of course on the rate they they apply to the further advance.

    If not, and you have no early redemption penalties, a remortgage to one of the PTM market leading fixed rate products would be the next move.
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    Property Tribes Mortgages is currently in discussion with lenders about the option of providing up to 100% finance via a first charge on the property being purchased and a second charge on an existing buy-to-let property. This would enable landlords to fund further buy-to-let purchases without providing a cash deposit.

    See - BTL mortgage update
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    [Image: 4995468760_6be86655d4_t.jpg]
    general operations director, site owner and moderator - propertytribes.com


    (21-07-2014 12:32 PM)nick tadd Wrote:  In discussion with lenders about the option of providing up to 100% finance via a first charge on the property being purchased and a second charge on an existing buy-to-let property.
    (19-07-2014 12:12 PM)Adam Hosker Wrote:  Their are also loans that are secured on equity in your home. Is equity loan NMD?

    I'd say it's not NMD (but can feel like it) you just don't see the cash as its equity.
    If discussions are same innovative product were discussing I believe it's a bridge product for refurb. .... so would need to increase value by 20%? to remain "nmd" - (achievable with many properties).
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    THIS PROPERTY TRIBES ACCOUNT IS NO LONGER USED. DO NOT SEND PRIVATE MESSAGES.

    YOU CAN REACH ME AT BESPOKE FINANCE for HMO Mortgages, Cheap Life Insurance and Limited Company Buy-to-Let on 08009202001