Find funding

Where do you find funding to invest in property? Well there’s the buy to let mortgage, but there are also other ways.

Save for the deposit – if you follow all the previous steps 1-10 you will find yourself in a position where, soon, you will have a growing amount of capital to invest. The first step on the property investment ladder, then, is to get an Agreement In Principle (AIP). This is where the bank or mortgage lender will agree to grant you a mortgage because of the funds you have available. This AIP can be in the form of a certificate which you can show to prospective vendors.

Interest only or repayment mortgage?

In interest only mortgages, you will only be paying back the interest on the mortgage – after the mortgage term, you will still owe the bank what you borrowed. The benefit is that your payments will be less, therefore profits higher.
With a repayment mortgage you will have paid off the capital at the end of the term. The property is yours. You will, however. Your monthly profits are therefore reduced, but you are gaining more in equity. Obviously you should seek the proper advice from an Independent Financial Adviser (IFA).

What if you don’t have the money to invest?

There is always a way, if there is the will. There are books written just on how to find finance for buying property. Here is one tip I can give you. There are people out there who have the money to invest, but simply don’t have the time. They will gladly invest in you if they are confident they will get a return. So go and find them. (More on this later).
Then there are family members with inheritance or pension payoffs who have nothing to invest in. Why not split the profit 50:50 with them. In an example later on, I show how you would both get £11,000 each. They put up, for instance, £110,000 and they get a 10% return in six months and you have a £11,000 payout for the project. Nice.

Other People’s Money

There are many ways to raise capital, here are a few:

Credit cards – especially 0%.
Loans and overdrafts
Private investor Go into partnership with someone who is cash rich and time poor.
Bridging Loans – there are pros and cons to this. Its very quick and easy, but it should only be for the short term (Days) and is high interest.
Multiple offer using creative financing.
Equity release on your home property.
Joint venture
Friends and family
Crowd funding