Investment Mortgages

Obtaining an Investment Mortgage

Having decided that you want to invest in a property, the next step will be to obtain the exact figures for financing. In a similar way to an offer in principle, an investment buyer can get an accurate quotation for their financing needs, which will allow them to assess the viability of their project.

The First Stage
Initially, an investor should obtain a range of figures from their lender or broker to enable them to make the final financing decision. At this stage, the figures will be largely ballpark, as the lender will not be able to produce any exact figures until the individual property has been identified.

At this early stage, the following questions should be raised:
What percentage of the value will be needed as a deposit
What rental return will be expected
Will it be possible to obtain additional financing for renovation work
How soon after obtaining the mortgage will re-mortgaging be possible; (this is particularly important if you intend to use the equity in this investment in order to finance the deposit on another property)

The Next Stage
Having obtained the rough figures, an investor should then be able to locate the ideal property. In reality, most investors will, at least, have a property or two in mind when they make their first stage enquiries. It is now that further investigations can be made into the rental potential or renovation costs, depending on the type of property.

When returning to the lender or mortgage broker with the property in mind, it will be necessary to have the following information available:
the full details of the property including asking price and a clear idea of the price that you intend to buy the property for;
a detailed analysis of the rental market and the expected return on the property;
a breakdown of any of the renovation or running costs for the property; and
the expected monthly income and expenditure.

By having all of this information readily available, not only will you have satisfied yourself that the property is a viable proposition, but you will also have satisfied your lender that you are serious about the project and that the figures do in fact add up.

Summary
Get the initial figures together which will enable you to spot a good proposition, immediately, and to eliminate any poor projects;
do your research; and
present your research to your lender in a thoughtful and logical manner.