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No Money Down Deals

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  • No Money Down Deals

    Many 'new type' of investors' have created substantial property portfolios with very little money upfront . The secret is borrowing against the value of a property rather than the purchase price.
    This strategy requires clever property buying . By that we mean finding property in the market being sold for less than it is actually worth (commonly known as BMV (below market value)). Once you have found a BMV property then it is now possible to buy the property with minimal or no deposit.

    When making a new purchase, you will typically find that lenders will lend a maximum of 85% of the property's valuation or 85% of the purchase price whichever is the lower. This would therefore still require you to part with 15% of your own money, even when buying under value.

    However, if you re-mortgage a property, The Lenders will consider lending up to 85% of the market value. Therefore, if you can somehow turn your purchase into a re-mortgage, you can borrow 85% of the value.
    In one recent example, the purchase price was £90,500, the market value £107,000. it was possible to arrange a loan of £90,950 (85% of the value) - A NO MONEY DOWN DEAL and leaving £450 to contribute towards costs.
    In another example it was able to get not just the full purchase price but also covere all costs and this deal also left the client with a surplus of nearly £10,000 to take on to their next property!

    The difficulty is finding properties that are truly below market value and where the rental income can meet the Lenders requirements for supporting the mortgage.

  • #2
    Yep - it can be pretty hard to get those BMV's, especially when so far it's been a seller's market!


    • #3
      This is where you get all the private ads in the papers telling you that they will buy your property cash. when yu get to speak to them they all tell you that they will give you 20% below market value! Wonder why?! I have bought below market value and it is a great way to get a property for little or no money down. You can still do it here in Wales!


      • #4
        Always best to get at least 10% deposit more lenders, more rates better footing.


        Get in a good financial position and try your luck with some cheeky offers. Ask the agents if there are any properties within your price range that need to sell quickly; this may result in one or two a year.

        You maybe surprised how many couples splitting want to release funds quicker than normal. Beware - adds in papers although good, result in your time spent negotiating against unrealistic volume public. Let the EA’s do the hard work for you.

        Release the funds by re-mortgaging on completion.

        Good Luck