Entering into the property investment sphere can be a daunting prospect.
Properties are big ticket items. So, they always cost a significant amount of money. This problem is the same for buyers who already have property, as well.
Getting the funds together for something like this can be almost impossible, without the right help. To give you a good start, this post will go through some of the ways that you can finance this sort of investment.
The normal way to get a property is through a mortgage. A mortgage is a long-term loan that is designed to cover the cost of a house and be payable over a long period of time.
Of course, when the bank gives you a loan this big, they also want you to contribute. So, you need a deposit. This will usually be at a minimum of around 3%, but you can always put down more if you want to.
This money goes to towards the house, so you don’t lose it. Most mortgages will allow you to sell the house at any time. But, at that point, you have to pay back all of the money that you still owe to the bank. If you sell for a profit, this won’t be a problem at all.
But mortgages can bring problems with them. In most places, if you want to lease or rent out a house, you need to have a different type of mortgage.
These situations are regarded as higher risk by most banks. This means that they charge slightly more to allow you to have a loan that will work.
These are known as buy-to-let mortgages. This is only important to people who want to make a return on their investment as rent.
In this case, you will have to factor in the extra costs when considering how much you’ll make with rent. Though if you’re buying a house to sell, you don’t have to worry about this.
For people who have invested in property before, you probably don’t want to get a long-term mortgage. You’ll have enough money from selling older properties to cover the cost of the new one.
But, you won’t have access to that money until you sell the old property. And, in most cases, that won’t be until after you’ve had to buy the new one.
This is where a bridging loan comes in. You can use business bridging finance for a variety of purposes, including any property investments you want to make. These loans are quite flexible and can be paid off very fast, so you won’t be in it for the long-run.
Hopefully, this will give you an idea of the options available for funding when it comes to investing in property, as this kind of market can be very difficult to join.
You need to save a lot of money to put down deposits on a house. But, it can be very much worth the effort if you buy the right house!
Main Image Source