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Investment Mortgages

What is an Investment Mortgage?

It is a long-term mortgage for landlords of residential or commercial properties and portfolios.

Investment mortgages are appropriate for commercial, semi-commercial, industrial, student, leisure, health-care, retail and other such properties which are rented/ let out to third parties unconnected to your own business. Examples could include shops with flats above, lock-up shops, single or multi-let offices, and industrial units or estates.

Depending on your investment strategy you may require an “Interest Only” loan to keep your monthly repayments low, and perhaps rely on selling the property at a higher value in the future to repay the loan. Or, you may require a Capital and Interest or “Repayment” loan knowing that when the loan term is up the property is mortgage free. We have lenders on our panel who can accommodate both strategies.

What can an Investment Property Loan be used for?

You are buying a new investment property:

Few people have sufficient cash resources to purchase a property outright, and even if they did, that might not necessarily be the best financial decision. As such, most buyers would take a mortgage over a long period of time.

We can also look to use existing properties you own to “gear up”, meaning that the cash deposit to purchase a new property could be reduced or even eliminated altogether if you have sufficient equity in other properties to use.

We recently helped an Investor buy a new investment property that had come to the market. He had a large amount of his cash tied up in a development project so didn’t have a cash deposit for the purchase, but he didn’t want to lose out on the opportunity. We looked at his existing portfolio and identified which of his properties held the most equity. We then approached a lender in order to refinance three of the properties at better rates, releasing sufficient cash for his deposit on the new property.

You are at the end of your existing mortgage:

Many lenders offer fixed rate deals that, once they expire, revert to a standard variable rate which in most cases is more expensive than the initial rate.

At this point we can research the market in order to get you a better deal.

Positive Commercial Finance has access to the whole of market. We use our vast experience to facilitate the most suitable mortgage available via the high street and specialist lenders.

You need some extra cash for a project:

If you have a property that has lots of equity within it, we can look to release this providing the rental income is sufficient to make repayments.

Personal circumstances may change

Many people manage to obtain finance even though their credit history isn’t the best, albeit the finance will probably be at a premium rate. Over time, once the credit report improves, we can help you to take advantage of this by obtaining cheaper finance from more mainstream lenders, who offer cheaper rates to those with “clean” credit.

Frequently asked questions

Who can get an investment mortgage?

Anybody aged 18+ with a sufficient deposit (or other assets to be used as a deposit).

Can I borrow in a Limited Company?

Yes, we are seeing more and more clients forming limited companies to purchase Investment properties, however before forming a Limited Company to purchase Investment properties we strongly advise you to speak to a tax adviser as its not always suitable for everyone’s personal circumstances.

Does the rent need to cover the interest?

Yes, and often lenders will want to see that there is sufficient contingency in the monthly rental income to cover things such as void periods, or maintenance costs. Typically, your rent should be at least 125% times the interest costs.

What sort of property can I purchase?

Each lender has their own criteria as to what they will and wont finance. For example, some lenders will not consider lending against properties within the leisure industry, such as pubs, restaurants, hotels etc, whilst others actively seek these opportunities. With our industry knowledge we approach only the suitable lenders thus saving time and ensuring you get the right deal for you.

What Interest rates should I expect to pay?

Rates can vary depending on amount borrowed, term and asset class, however loans are available from 2.4% over base rate

What Loan to values can I achieve?

Loan to Value (LTV) varies from lender to lender. Usually the more conservative the LTV, the cheaper the rate available, however LTV’s of up to 80% can be achieved.

Other options within Mortgages

If you want a fast, flexible and reliable service, try
Positive Commercial Finance.

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