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Borrow money for coronavirus driven investments?


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Hi,

With borrowing rates an at all time low...I have a good credit rating with 1 x BTL property and looking to expand. Would you recommend borrowing money now (15-20k) and stashing away for use if good investment opportunities present themselves during these Coronavirus driven times? Those with cash often win and can feel that the economy will be in for a rocky ride and opportunities may present themselves

 

Thanks

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You are not the first person to ask about borrowing money at super low rates to capitalise on a bear market. I'll not comment on the wisdom of that...

From a mortgage perspective though, lenders are going to want to know what you want the money for, and they are not going to agree to lend you that amount to invest in stocks and shares. If you want to pretend its for something else you will need some evidence and at that point you are committing mortgage fraud. Just a heads up on that point!

043_logo_final_03.png.0cdf828351f81e6097208048ac2d018d.pngStuart Phillips

Independent, Whole of Market Mortgage Broker

AALTO Mortgages Ltd

Web  www.aaltomortgages.com

Email  sales@aaltomortgages.com

Call  020 7183 1101

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7 hours ago, Stuart Phillips said:

You are not the first person to ask about borrowing money at super low rates to capitalise on a bear market. I'll not comment on the wisdom of that...

From a mortgage perspective though, lenders are going to want to know what you want the money for, and they are not going to agree to lend you that amount to invest in stocks and shares. If you want to pretend its for something else you will need some evidence and at that point you are committing mortgage fraud. Just a heads up on that point!

But is it feasible to remortgage the current buy to let to take out some equity, and so there is cash that way? 

 

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Thanks..I was thing more personal loan to stash away rather than a re-mortgage as I would be hesitant to be too heavily leveraged during a time of change. was talking to someone the other day about personal borrowing, I can get a great interest rate deal with very low early repayment charges if I just wanted to give the money back in 6 months if no opportunities became available. 

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I think it is very prudent to consider that there may be good opportunities coming up.

However bear in mind that if you take a personal loan, this will be a credit commitment that has to be declared when applying for a mortgage. This could reduce the lenders view of your ability to afford the mortgage and therefore hamper you in getting it in the first place.

Also in terms of leveraging whilst this strategy may help avoid the property itself being over leveraged, and so not increase the chance of negative equity, remember that if you take a personal loan to use as a deposit and then get a mortgage you are in effect at that moment buying the house at 100% LTV. Worth the risk? Maybe, maybe not.

Good luck

Steve

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You will find it near impossible to get a BTL mortgage where the deposit is coming from a personal loan, for exactly the reasons you have stated, you have zero skin in the game...

043_logo_final_03.png.0cdf828351f81e6097208048ac2d018d.pngStuart Phillips

Independent, Whole of Market Mortgage Broker

AALTO Mortgages Ltd

Web  www.aaltomortgages.com

Email  sales@aaltomortgages.com

Call  020 7183 1101

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