How to Finance a Property Purchase
Richard Butler-Creagh started his career in building industry where he ran his own company based primarily in north-west London called Butler-Creagh Refurbishments specializing in working for developers and refurbishing their properties to prepare them for the market. In 2013 Richard Butler-Creagh founded Henley Finance which provides short-term bridging finance to the property development sector. Here is Richard Butler-Creagh advise on how to finance a property purchase.
The property market crash has become just a distant memory and home prices are looking good again. But does this mean that there are good opportunities for investing in the real estate market? Interest rates still remain low, the days are fast, easy financing transactions are over and the tight credit market can make it difficult to secure the loans needed for investment properties. But still, a little creativity and good preparation will bring financing within the reach of property investors. If you are ready to borrow for a residential investment property, these tips can improve your chances of success.
Make a considerable down payment
Since mortgage insurance will not cover investment properties, you must put at least 20% down to ensure traditional financing. If you can put more than 25%, you will qualify for better interest rates. If you don’t have down payment funds, you can try to get a second mortgage on the property but it is likely to be an uphill struggle.
Be a strong borrower
Although a lot of factors, among them a loan-to-value ratio and policies of the lender you’re dealing with, can influence the terms of loan on an investment property. You must check your credit score before going and attempting the deal. The alternative to paying points if your credit score is under 740 is to accept a higher interest rate. Also, having many reserves in the bank to pay all your expenses for at least 6 months has now become part of the lending equation.
Shy away from big banks
If your down payment is not as big as it can be or you have other unfortunate circumstances, you can consider going to a bank for financing rather than a large country-wide financial institution. Mortgage brokers are another great option due to they have access to a wide variety of loan products.
Think creatively
If you are looking at a property with high chances of profit, consider securing a down payment through a home equity line of credit from credit cards or via life insurance policies. Financing for the purchase of the property will be possible through private and personal loans from peer-to-peer lending companies which will connect investors to individual lenders. Just be aware that you may be met with some skepticism, especially if you don’t have a long history of successful real estate investments. Some peer-to-peer groups also require that your credit history meet certain criteria.
If you want to improve your property’s capital gains or are just looking to make a higher rental profit, follow these tips from Richard Butler Creagh to make sure your property increases its value. Find out more about Richard Butler-Creagh here, Visit Richard Butler Creagh Crunchbase page here and keep up to the date with Richard Butler-Creagh news here.
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