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About arjunb

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  1. Hi all! I have a five-year fixed rate residential mortgage & the fixed rate period expires in Autumn 2023. I wish to extract some capital from my home to buy another property but the Early Repayment Charge for my property is prohibitively high. Consequently, I think it would be better for me to get a second charge mortgage on my home. What are the basic requirements for a second charge mortgage? Do they do a credit check? A valuation survey? & how does it work between both lenders, because there is a change in title deed? Would the first charge lender need to agree to a second mortgage? Thank you!
  2. Thank you for your reply Matt! Whilst I know this is cheeky... how would it be possible for the lender to realise that your work colleague/friend gave you a loan if you route it through your parent's account? Imagine your friend agrees to a £20k loan, sends it to your Dad's account & your dad agrees to give you £10k. Then your Dad transfers £30k to your account. The lender isn't going to look through your Dad's account to check where that money has come from. I think? Thank you very much Conrad! I haven't asked a broker yet, but I will do soon.
  3. hi all! Was trying to brainstorm ideas on how to save enough money for a deposit on a BTL property to be purchased using a new SPV for someone who does not have any other properties. I came up with the following. Please add to this if you have any, thank you! Director's savings Loans from family & friends on gentlemen's agreement personal loans in the Director's name (but as I understand it, this will mean that getting a BTL mortgage will be really tough, am I right?) For the second one, would lenders accept this as a legitimate deposit to use in a BTL purchase?
  4. hi everyone! I was wondering if it's possible for me to live in a property that is owned by my property SPV? If so, how would this be structured (i.e. would I be a tenant of the SPV?) Cheers!
  5. Thanks for your reply Conrad! & sorry for being unclear, I'm new to this game. I didn't think of that actually. When the surveyor comes round & sees that the property is of a certain value & that I have clearly understated the property value, will this be a big problem? Will the lender see this as an issue? Yes the property has a registered charge on it. Does this mean that I cannot gift the property at all? I have read examples online that suggest that I can? Thanks for your reply Debbie! I'm not sure if I exactly understand the tradeoff that you're suggesting. Is it that I recoup some of the SDLT by getting 3% back on the purchase of my new home but then also have to pay SDLT on the transfer of the property. The other option is vice versa, right?
  6. Hi all, I’ve seen a fair few ads for residential mortgages that require just a 5% deposit, rather than the usual 10%. Are there any particular catches to this? I know that there are eligibility criteria, but as far as I’m aware, your home price needs to be less than half a million & you are either a first time buyer or you are moving home. I assume that there will be a higher-than-normal interest rate on these higher LTV mortgages but on average how much higher? Thank you!
  7. Hi mate. Well done on saving £70k - that's a pretty big achievement in itself! Wanted to confirm the numbers with you... your mortgage will be £353k on top of which you'll be putting £70k? So your property price will be around £423k for the 2/3 bedroom maisonette? Personally, I'd go for the big purchase as early as possible because (like you said), you'd like to start investing in properties sooner rather than later. Advantages include: getting the larger property earlier means that you'll have a greater absolute property price increase in the future (in £ terms) which means that you'll have access to a greater amount of credit, simply because your collateral is of a higher value you immediately have a secondary source of income (the revenue from the 2/3 bedrooms) that will supplement your annual savings. This means that you'll be able to save even more & buy your second property sooner you're less likely to grow out of this property: you can continue to do rent out your 2/3 bedrooms for a very long time, whereas if you were to get the studio, you may find it too small if your personal situation changes (partner, children, etc.) hope this helps!
  8. Cheers Conrad, very helpful as always. So do lenders to SPVs often take into account the director's salary? So how does it work with full time property investors, because they don't have a non-property related income? Am asking because am hoping to be in a position one day that I can do this myself!
  9. Thanks Conrad, always a helpful member!
  10. Hi all, In the next few years, I hope to move my current residential home (that will have a mortgage of 75% LTV when I sell it) to an SPV in my ownership that I set up for my property investment going into the future. I will then buy a property in my own name to live in. What would the most tax efficient way to do this be? I'm yet to consult a property specialist tax accountant, but as I understand it, I have a two main options: I sell the property to the company at a very low price (how low can I go?) and set the price such that the SPV pays zero SDLT. I pay no capital gains tax since the property is less than one acre & has been my residential home since I moved in (& I fulfil all the other requirements). I can claim SDLT relief after I buy my new home since I have sold my (residential) property within 3 years of buying the second one. I gift the property to the SPV for no monetary consideration & SDLT is due at 1% of the outstanding mortgage sum. I don't pay any CGT as in #1, but I cannot claim any SDLT relief because I haven’t sold the property to anyone, but rather gifted it. So long story short - my SPV can either buy it off me or accept it as a gift from me. Which one is best? Thank you very much all!
  11. Hi all, After doing some reading & listening to some podcasts, it's become clear to me that one of the best ways of getting undervalued properties & securing them quickly is by buying using cash only. This means that the lender cannot 'get in the way' of you & your deal & it can progress very quickly. Of course - buying using cash isn't an option for the majority of investors, admittedly including me. But this got me thinking: what stops someone from refinancing all of their preexisting properties as and when they can (i.e when the fixed rate period ends), extracting all the funds they reasonably can & then sitting on possibly a large pile of cash waiting to purchase their next property cash down. Then, after the purchase is complete, they will have 100% equity in the property & then they can get a mortgage on this property, pull out however much they can again & use this for the next purchase? This would mean that the lender can't be slow or difficult during the tense period between the offer being accepted & completion, during which you could get gazumped or some other issue. The main reason why this is possible is the low interest rate environment in which we find ourselves - in particular the UK & EU. Borrowing money at less than 3% isn't that much of a cost if you can consequently get your deals done quickly & secure some great properties that you would have otherwise not been able to. I might be being a bit thick & this might already be something that a lot of property investors already do, but I'd like to hear about whether this is possible. As always, thank you very much to this great community for the help!
  12. Hi all, I hope to open a property company in the future to be used as a SPV to hold the properties that I wish to buy. I have a friend who did the same & had saved up enough money to be able to buy two properties through his newly formed company from the get-go. However, he found after buying one, that lenders weren't happy to lend twice to his company so soon since there wasn't any trading history, so no real evidence to show that the company was good at what it does. Admittedly, my friend hadn't touched property before. My question is - to what extent is this a problem for newly formed companies? Is it true that no company will be able to get lending on multiple properties quickly? Or was he unlucky? Is there a limit in sterling terms on how much they'll lend? Or is it a case-by-case basis? Does the lender take into account the lending profile of the Director (in this case, my friend) or will the lender only see that the SPV is a very new company? If they simply won't lend to this new company, how long do you have to wait to start on your next deal? Thank you very much in advance ladies & gents!
  13. That was very useful, thank you very much Lilla!
  14. Hi all, I'm new to property investing - please bear with me. Whilst I'm unsure of what I'd like a future property portfolio to do for me (retire early, passive income, second income, etc.), I know that I'd like to grow one as a side business as much as I can: this is something that I'm really enthusiastic about. On the Property Geek podcast, I listened to an episode in which a guest speaker spoke about how important it is to start the portfolio properly from a taxation viewpoint, as well as a growth one. From what I have gathered, read & heard about, it is almost always best to start by buying in the name of an SPV instead of in my own name, especially if I wish to grow this as big as possible over the coming years. Is this correct? This is synonymous with what I have heard from a family friend who has bought 4 or 5 properties in his & his wife's names & now is finding it hard to get access to finance for the 6th, 7th & 8th properties. If my aim was to build a large property portfolio that could be used to provide an income as well as become a really interesting full time management job, would it be best to buy in the name of an SPV? I have heard however that initially, a newly-founded SPV finds it hard to gain access to credit since there isn't any trading history to look at & the director's experience is nowt (like mine would be) & this is more akin to providing financing to a start-up rather than to a landlord. Consequently, interest rates on the first few 75% LTV BTL purchases are higher than if I were to take the properties into my own name. Is this correct? Finally, I have heard that obtaining HMO financing for the first property is often difficult because the lender sees that the company nor the director has any experience in property yet. Is this true? If so, would I then have to do a short term tenancy agreement, do this for a period of time & then convert to an HMO (I realise it isn't as simple as that, I'd go through the required regulations, Article 4, safety, licensing, etc.)? How long would this period of time have to be? There's a lot of questions there - sorry about that! Thank you for all help in advance!
  15. Hi all, I was thinking about how to properly analyse a particular city or area for long term capital growth & decent, consistent yield - I came up with the following steps. Would anyone be able to critique the following & perhaps add to / remove from the list below? Firstly, think about demographics. This is often the most important factor for any long term investment, particularly property. If you can find a particular demographic trend, that is hard to stop & has strong reasons to continue, then this is a great start. For example, are many businesses moving to a particular area near you? Is your area a popular choice for migrants from outside the UK? Is there a large university nearby (preferably Russell Group? Is there a particular industry that needs to be in the area for structural or fundamental reasons, i.e. near a big airport or seaport or mine? Location: location is incredibly important, for any property anywhere in the world. In the UK, I'm hold the view that HMO properties close to NHS teaching hospitals for junior medical staff (particularly junior doctors & nurses) will always attract strong, persistent rental demand as well as HMO properties close to strong transport links. You'll also have decent capital growth in these properties I think. But, to each his own & whatever you invest in, you need to convince yourself that your location is desirable for your target market. Then think about your financials. If your financials add up well in the worst case scenario, then you're going strong. Make sure that the project is financially sustainable & financing won't be a problem, if you'll be using it. Think about optimisation. Perhaps you could reduce costs in a certain area or perhaps do the project as an HMO to increase profit potential? Or maybe buying in the name of a special purpose vehicle (SPV) will allow you to grow your portfolio faster? I'd love to hear what other members have to say about this - fire away ladies & gents!