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Property purchase funding options


Property purchase funding options

Q. I am looking into purchasing a property for an investment. What would the best funding option be?
P. Hendrick, Ecclesall

Funding your investment property is normally straight forward. First of all it is always wise to shop around for quotations and never just take the easy route by going to your bank or building society as they will usually only offer their own products or services.
Although, in some cases, high street lenders can be competitive. Your best option is to go through a mortgage broker/independent mortgage advisor or IFA. All IFAs are regulated by the Financial Services Authority and should only talk to you about products upon completion of a fact finding questionnaire, thus enabling them to find the best product to match your requirements.

In many cases a "Buy to Let" mortgage will be proposed. According to simplicityfinancial.com "the majority of investors use this as the optimum way of funding". This is how it works - the lender will require a deposit between 15 -20% of the property value with the remaining balance payable over a typical mortgage term (say 25 years); and just like a domestic mortgage you can have a repayment or interest only payment profile.
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