Home Loans: Your Options for Purchasing a Property

The vast majority of homebuyers in the UK will require some type of home loan to fund their property purchase. Yet many aren’t aware of how many loan options are available to them. Buyers don’t have to just rely on a mortgage from a high street lender if they wish to buy a home. There are a number of different loan types and government back schemes that can augment or completely replace the need for a mortgage. This guide will explore all of the different options available to you so that you’re in the best position possible when it comes to finding finance.

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A private mortgage

For many, a mortgage will be the only loan they use to buy a home. Individuals can rarely pay for a house in cash, so banks and high street lenders will typically loan up to 95% of the cost of the home. In return, the mortgage provider will charge interest on the loan, which the homeowner must pay every month. Failure to keep up with payments will result in losing the home. Mortgages usually last 25 years, but they can be shortened to any length of time. Mortgages are the most common form of home loan, but they aren’t suitable for everyone. Banks have become increasingly cautious since the recession and it is much harder for people with small deposits, low incomes or bad credit histories to secure a mortgage.

Help to buy equity loan

First-time buyers have been hit particularly hard by high property prices, which have made it almost impossible for many young people to get on the property ladder. In response, the Government launched the Help to Buy Equity Loan scheme to help first timers get a foot on the ladder. With a 5% deposit, first-time buyers can secure a 20% loan from the Government on the cost of a newly built home meaning they will only need a mortgage of 75% to complete the purchase. This will result in much more affordable repayments. The Government’s loan is interest free for five years and then charged at 1.75%, rising annually by any increase in the Retail Price Index plus 1%. To qualify you must be a first-time buyer, use the property as your permanent residence and be buying a home that costs under £600,000.

Shared ownership

Another Government-backed initiative is the Shared Ownership scheme. Rather than buy the entire property outright, this allows buyers to buy a share of the property and then pay rent on the remainder. As a result, you pay the mortgage payments you can afford to start off with, and then buy the remainder of the property over time as your finances allow. There are strict criteria that you must meet to become eligible for this scheme, however.

  • Your household income must be less than £80,000 (or £90,000 if you live in London)
  • You can’t own any other property
  • You can’t have outstanding credit issues

Only specific properties are available to buy under this scheme, too. They will typically be new builds and will be purchased from a Housing Association.

Right to buy

A final Government-backed initiative to help people get on the property ladder is the Right to Buy scheme. If you are council tenant who has been living at your property for at least five years, you could be eligible to purchase the property at a discount. Discounts can be as large as £104,900 in London and £78,600 outside of the capital. Not everyone is eligible, however, and you will need to check the Government website to confirm your eligibility.

Bridging loans

The problem with mortgages is that they can take up to six months to get approved. For many buyers, this delay can mean missing out on the property of their dreams. In cases where time is of the essence, a bridging mortgage specialist like Top 10 Finance Bridging Loans can help you find finance that’s an excellent alternative to traditional mortgages. A bridging loan is a short-term loan that aims to “bridge the gap” until more secure funding is obtained whereupon the loan is repaid in full with interest. A common scenario where a bridging loan is useful is where a family want to purchase a new home before their current property has sold. Getting a mortgage will take too long but a bridging loan can be approved in a fraction of the time. The bridging loan is used to buy the new home and is repaid when the previous family home has been sold. Bridging loans aren’t for everyone so it will be important to speak to a bridging mortgage specialist to decide if this is the right solution for you.

So there you have it, there are all of the types of funding available to you. But don’t forget to speak to a specialist before you apply for a home loan or government scheme.

Real Estate Investment: 4 Properties You’ll Never Struggle To Find A Tenant For

As attractive as the idea of property investment may be, many people find themselves put off by one huge concern: the ability to find tenants. Tenants, after all, are crucial to your ability to generate a profit from your property portfolio— but there’s no denying that landlords often  have huge problems relating to consistent tenant occupation rates.

Tenants are, to an extent, inherently transitory. This is one of the major benefits of only renting a home; it offers a flexibility that allows people to move from place-to-place with relative ease. As attractive as this ability may be to tenants, it can make prospective landlords rather edgy about the viability of property investment as a whole.

If you have contemplated real estate investment and then pulled back over concerns regarding finding tenants, then the properties below are well worth considering…

#1 – Student accommodation

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Student accommodation is always difficult to find. Simply put, there are more students than there are student-friendly properties. Thus, thanks to the eternal rules of supply and demand, choosing an investment property that can be rented to students is a surefire way of ensuring consistent occupation.

There are many decisions you will have to make if you investigate this kind of property. Are you going to let to a single student, who occupies a single apartment? Or are you going to let a single multi-room dwelling to a number of different students, who may or may not know one another? The second option is by far the most common, as few students have the funds available to live completely independently of one another.

If you let a property to a number of different students, then you will need to satisfy the rules and regulations involved in the process. You will be letting a property under a “house in multiple occupation” (commonly abbreviated to HMO) designation, which does require compliance with extra conditions. However, if you find a property close to a campus and contact HMO specialists to ensure you meet all the necessary requirements, you should be able to expect a high occupancy rate— which helps to protect both your initial investment and your profits.

#2 – Properties close to a beach

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As with student accommodation, this option is a different form to the standard “buy to let” that most prospective property investors imagine. However, again like student accommodation, buying properties close to a beach can be an incredibly savvy move.

First and foremost, you’ll be able to consider letting a beach-adjacent property in the conventional way; to one individual or family group, and renewing the tenancy on a monthly basis. Properties close to a beach will always be popular, but you are still going to be subject to the need to find consistent tenants. This, as discussed, can be difficult.

So buck the norm and opt for a different method of generating an income with your property investment. Rather than letting your property on a standard basis, offer your property for holiday rentals and AirBnB listings. These rentals might be short, but the close proximity to the beach should help ensure a continual stream of tenants, and those tenants will be easier to manage than conventional renters. Renting to holidaymakers gives you flexibility to reclaim and use the property whenever you want, allowing your investment a sense of freedom without all the red tape involved in managing a conventional tenant.

#3 – City centre apartments

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It doesn’t matter what city it is; city centre apartments will always be a great choice for rental properties. These properties are so in demand for one simple reason: everyone hates commuting.

If you find a property close to a business or financial district, there’s no doubt it will be an excellent investment. Dedicated workers in these areas will love the idea of a short commute combined with great access to the city’s nightlife, or you may find tenants who prefer to use the property as a pied-à-terre during the working week. Either way, a great city centre location is a reliable choice for any property investor.

While you may naturally be drawn to family homes in beautiful locations as a property investment, ultimately, you have to follow the people. City centres will always be bustling hubs, so you can expect a constant stream of city-centre workers wanting to rent from you. You’ll also be able to charge higher prices per square foot than you would on a family home. The one downside is that you will also pay more for the property itself, but you should be able to earn this investment back in consistent rental income.

#4 – A property with nearby transport connections

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It’s not just a nice neighbourhood or close proximity to a good shopping mall that you need to keep an eye out for when buying properties; transport connections matter too. Ideally, you want to find a property that offers at least two of the following:

  • Easy access to any railway or underground stations, preferably within less than 10 minutes walking time.
  • Easy access to bus stops.
  • Good road connections; less than 10 minutes drive away from a connection to a major highway.

Transport is often a key decision for tenants, especially those who are going to be commuting. You could have the nicest investment property in the world, but if it’s in the middle of nowhere and only serviced by a few buses a day, then tenants just aren’t going to want to live there. Tenants will accept smaller properties with excellent transport connections, so don’t think that the property itself is the only consideration you have to make. Your chosen property has to be as nice as possible, but its location — and particularly its proximity to transport links — is just as, if not more, important.

In conclusion

So if you have always wanted to try property investment but have worried about obtaining tenants, choosing one of the options above could be the perfect solution for you. While you will inevitably occasionally have gaps between tenants, the four property types above can help to ensure those gaps are relatively short.

 

Climbing The First-Time Buyer Property Ladder On The Right Foot

The number of first-time property buyers in U.K is set to hit a 10-year high in 2018. Property is one of the surest avenues to creating wealth. When we are young, thinking about making future investments is not always at the top of our priorities. For young adults who want to invest early, getting into property can help you achieve your dreams. If you are wondering how to get successful and make profits in home-buying, the tips below can prepare you for a bright future.

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Photo by Lian Jonkman on Unsplash

Start Small and Start Now

At first, venturing into property can seem intimidating due to the talk of big money. However, you don’t need to have massive financial muscle to buy your first home. As a young person, all you need is to start saving that extra coin today. Be accountable, create a budget and educate yourself on how to manage what you have. When you finally save up enough and reach the minimum amount for a startup, it’s always best not to wait as there is no right time to start investing.

With whatever you have, you can first buy a single property and then increase gradually. It’s worth noting that when you start small, you gain valuable experience along the way, and you minimise risks if things get out of hand. When you invest today, your property will start appreciating and gift you with the money needed to expand your business.

Increase The Value of The Property

For your property to fetch a tidy sum and sell fast in the market, you need to be creative. Think of ways that you can increase its value. One of the proven steps to selling your home quickly and for top dollar is by improving its appeal. Create a good first impression by adding a fresh coat of paint, changing old fixtures, installing new lighting and keeping it clean at all times. Also, brighten up the outdoor area as the kerb appeal is what makes your property more inviting. Before making improvements, always do some research to determine what potential buyers will be looking for. With this, you will maximise returns and steer clear of making wrong financial decisions.

Surround Yourself With The Right Team

As a newcomer to the property world, you will frequently be faced with critical decisions. To make the correct choices, you need to surround yourself with people who can nurture you and feed you the right information. Step by step, build close relationships with qualified, certified, and trustworthy property inspectors, agents, contractors, mortgage brokers, and accountants. Due to their knowledge of market dynamics, professionals are well placed to offer guidance, give correct facts, protect your interests, and ensure you make correct decisions in future. With the right team, your investment is set to flourish.

Don’t Sell Too Quickly

Most young property investors tend to quickly sell their accommodation when they feel an opportunity has surfaced. After purchasing a home, resist the urge for quick money, and hold on to it a little bit longer. The longer you wait, the sweeter the deal. Always keep close tabs on the market trends as it will be easier to determine the right time to cash in. In the meantime, you can even make a decent income by renting the property out to a tenant.

For your young business to thrive, always conduct extensive research instead of relying on speculation. With this approach, you are assured of steady profits regardless of the money you invest. Do some background checks on the location, analyse the growth potential of the area, and consider your future needs. By being smart and staying informed, you are set to be a property genius regardless of how young you are.

Moving House: The Affordable Approach

If you and your little ones are planning a big move this year; it’s important to keep things as stress-free and as affordable as possible during each step of the way. Your kids are like sponges, and they will no doubt be absorbing your approach to spending and saving as you navigate through the property selling and buying process. There will be far more than simply exchanging the money needed for your next home, and receiving whatever you can for your current abode, so it’s worth a little extra effort when it comes to preparing and planning ahead.

A happy and straightforward moving process is something that you can get the whole family involved in. They’ll learn a little about each stage of selling and buying, and the work that goes into a successful moving day, so don’t be fearful of explaining what is happening to them. If there are particular financial consequences to certain actions, especially positive ones; share and explain them so that you can instil some great values and knowledge surrounding the cost of moving house, property, and real estate in general. Who knows; you might just spark an interest in a budding property tycoon of the future! The following are some things to consider if you’re about to pop up the for sale sign and want to save cash where you can as you’re heading out on your exciting property adventure together.

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Image source: https://www.pexels.com/photo/home-real-estate-106399/

Research And Sourcing

If you head towards the first estate agent or property legal team that you see; you’re unlikely to be able to save much money at the beginning of the process. However, doing some thorough online research, and sourcing more affordable options to suit your family, will ensure that the process doesn’t leave you broke. Therefore, it’s worth checking out some conveyancing quotes online as a starting point, and you can figure out the extra cash you’ll need to put aside to pay for everything. There are also options to sell your own home now, which will get rid of hefty agent fees, so that’s another area to consider if you’re willing to put in the work. You’ll need to balance what’s most important to you and your family in regards to time, money, and effort along the way, so the sooner you get started, the better.

A Bit Of DIY

The do it yourself approach will save you money throughout selling and buying a home, and the process of moving along the way. Therefore, it’s worth figuring out what you’ll be able to do without hiring anyone to help. If a survey comes back on a house that needs crucial renovation, rewiring, or a multitude of other work; work out if you’d be able to fix any problems yourself before moving day rolled around or as soon as you all moved in. In regards to removal costs; you could consider the packing process as soon as you know you’re moving and renting a storage unit near your new home so that you can do the majority yourself. Again, it’s about weighing up what will cost more time, money, and effort than you’re willing to spend, and going from there.

How to Build Up Your Property Portfolio

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Image Credit: Flickr

There are few safe investments you can make but one of the best is property. Putting your some of your money into bricks and mortar is a good way to make it work harder for you and will give you a great investment in return.

If you are a smart buyer, finding the right properties will give you a good financial edge and should help you quickly build up a sizeable nest egg. Buying to let is a good way of safeguarding a property and making money while your investment remains. However, if you are looking to make a quick buck, buying and doing up a property is a good route to go too.

Fixer-upper

There is a lot of money to be made in the development of old properties and if you are willing to move about a bit, you could quickly make enough to stay in one house while you do up another. There is a wide range of houses that fall under the term from a fresh coat of paint to full building works so think about what you are willing to take on before you start.

If you have never fixed up a property before, you should definitely request the advice of planning consultants before you implement any radical changes. You will need to gain planning permission for structural works like reconfigurations or extensions and a planning consultant will be able to advise you on the best plan so that you don’t waste any time going through rejections and appeals.

Buy-to-let

When you are looking for a property to rent out, you need to be sure that you will get a renter soon in order to cover your costs. If you can, use savings only to invest in the property, leaving you with enough cash for a rainy day. Otherwise, you need to make sure that your renter will be able to pay enough to cover any buy-to-let mortgage you take out.

You also need to consider who you want your rental to appeal to and decorate accordingly. If you are looking for student lets, make sure that you provide enough neutral furniture so that they can move straight in at the start of term. For other renters, you might be better off showing an unfurnished house as they are more likely to move in for a longer period and want their own things.

Holiday Rental

With the likes of AirBnB arriving, now is a really good time to offer up a property for short term holiday lets. You might not have the security of long term tenants but you will be able to make a considerable amount of profit.

The rules for interior design are also slightly different. You might consider going for a themed house or apartment to make it stand out from the masses or you could use smart design to give a luxury appearance and charge accordingly.

Whatever you choose, investing in property is  good idea for your financial future. It will give you a real investment you can fall back on as will as work your money hard to build up a decent nest egg.