Investment property financing - 9 great ways to raise finance and money

There are a number of methods to raise finance to help your property Business grow. The trick is to ensure you buy below market value allowing you to remortgage to pull the money out to pay for the borrowed money.

1. Home equity

This is probably the easiest way to raise equity if you have a low loan to value on your house or alternatively if you already have buy to let properties then you can remortgage subject to your lenders terms and draw money out to finance more properties. There are typically two methods you can use to withdraw money out of your property - drawdown / offset mortgages or a straight remortgage. Furthermore you can offset the interest of your mortgage against your tax bill.

2. Credit cards

In today's World you can simply check online at sites such as moneysupermarket.co.uk where you will find a list of the best credit cards as well as personal loans. You are search for a card that pays you cash into your account or 0% on purchases, should you need to furnish your property for example. Some people have used this strategy successfully, but we would recommend really scrutinising the affordability and making a good Business decision as to whether it really is an option. Although it is a method that has been used one has to watch out for how much credit you have as this can in turn affect whether the bank will lend you a mortgage. A good broker will be able to guide you on this.

3. Secured loans

In specific circumstances, secured loans can be an excellent method of raising property investing finance against your assets. In a nutshell a secured loans is available to property owners, whereby the money is secured against your asset(s). They are easier to obtain then an unsecured loan and are cheaper and also have the advantage over unsecured loans even if you have a poor credit rating and generally have longer terms, usually from 5 to 20 years. The interest rate depends upon the loan size, length, your credit score and the free equity in your property. In order to find the best deal, there are a couple of price comparison websites including moneysupermarket.co.uk and moneyextra.com.

4. Personal loans

There are some good rates out there and you can withdraw money very quickly depending on your credit rating. However you should be able to work out the cost of your monthly payments in comparison to the rent received and if you get a good positive cashflow property. For example a multi let whereby you are receiving a high enough yield to service your interest only mortgage as well as you personal loan payments then it certainly can be a viable option. However you will have to do your sums prior to embarking on such a strategy!

5. Overdrafts

If you are a recent graduate you may be entitled to an interest free overdraft facility and do make use of it as it is the cheapest and best way of getting your hands on money where there is no interest. However for those of you who don't have this advantage then you can negotiate an overdraft facility with your bank. You will most likely only pay interest on what you borrow and if you have a good relationship with your bank then you may be able to actually get a substantial amount of money through a commercial overdraft facility.

6. JV [Joint Venture] with family members

How about approaching a family member and playing your idea (s) to them. You never know what this might bring until you try. Some people earn a lot of money but do not have the time for investing in property and sometimes these are the people you can work with to help them help you. Think carefully how you will present them with a quality business plan and hat will motivate them to work with you. Your financial data must be spot on and you must have a clear vision of your aims and objectives as well as their return and how you will report to them as a partner in business. Set the ground rules early on and keep evolving your strategy with the times.especially in today's market.

7. Private investors

There are people out there with bags of money and if you happen to know any such people do certainly exploit this opportunity. Think about if you had access to that cash and somebody offered you say 12 - 15% pr annum return on your money - sound like a good proposal. Well many people out there will bite your hand off if you can offer them a greater return than what they are getting from the bank. You can advertise in the financial times or papers that appeal to such a demographic class.or perhaps speak with family members and network to gauge who you may want to approach with your ideas and proposal. Often you will find that these people may be able to help you and they have vast experience and knowledge in their specialist field of expertise. Also it is a great method to build your contact base and who knows you may even partner them in business - just check out Dragon's Den!

The private investor will want some type of security and this is usually in the form of a charge on your property or properties you are purchasing. They may charge you a monthly interest or be content with a profit share. How the deal is structured must be attractive for both you and them. Remember to aim for a win:win situation!

8. Personal possessions

Property financing doesnt have to be all paper work! Check out your garage or loft and look for any valuables that will bring you any spare cash or indeed speak to your grandma or the elders in the family and clear out their 'junk'. You will be surprised what you can sell! Especially in today's day and age when you have the internet at your disposal and sites such as Ebay where you literally sell anything.

9. Redeem a pension or shares

Do you have a pension policy or shares that are materializing? If so work out whether that money is better off spent on your business idea (s) i.e. buying and selling property perhaps or simply buying and holding for the long term. Everyone strategy is individual an you must be comfortable with what you feel best with.

Get your creative juices going, theres lots of ways of investment property financing , if you need advice or have a quesiton don't hesitate to contact us.

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