The best way to raise 250k from these assets?

[rgap 0]

Hi everyone. Hoping for some friendly advice.

About me

I'm starting out, and looking to build a portfolio of BTL properties over the next 5-10 years by refurbing and remortgaging, boosted with the occasional refurb > flip. I'm at the very start of that journey - so please forgive all the inevitable newbie mistakes.

£250k targeted

To give you a broad idea of the numbers I'm looking at, I'm targeting distressed properties at around the £200k mark, with £50k planned expenses (all taxes, fees and refurb) and hopefully a £300k-ish remortgage / sale value.  I'll be doing this via a new ltd company (Company A), and reinvesting any profits.

My current financial situation

• I have approximately 840k of equity in my private home (estimated value 900k, with 60k remaining on the mortgage and 1 year left on a fixed term deal)
• I have 50k cash profit sitting in another limited company (Company B )

In this position, how would you fund a £250k deal? The options as I see them are...

1. Remortgage for purchase price -  additional £200k of equity from personal house + £50k from Company B  = £250k 
2. Remortgage for deposit - additional £50k of equity from personal house + £150k bridging finance at 75% LTV + £50k from Company B = £250k
3. Get a second charge mortgage for purchase price - £200k against personal house + £50k from Company B  = £250k
4. Get a second charge mortgage for deposit - £50k of equity from personal house + £150k bridging finance at 75% LTV + £50k from Company B = £250k

Any other ways to cut it?

Any thoughts on the pros and cons of each approach, and any absolute don'ts would be very welcome!

Thanks so much in advance

 

 

 

 

[chris_hancox 4]

You'll find it easier to secure a deal on your next project if you are able to buy in cash, and your margins will be higher if you haven't had the cost of bridging, so the cheapest way would be to raise the full purchase amount from equity in your own (also least hassle). Then it's simply a case of speaking to a broker to find out which is more cost effective: a remortgage taking into account the ERC on your current deal, or a second charge (which is usually at a higher rate).

I hope that helps!

[the_dave 11]

Personally I'd keep it simple and remortgage to pull £250k out of my main residence. Still only a small mortgage relative to the value of the house and frees up the capital to build the portfolio. Keep the £50k in company B to pay down your mortgage or for living expenses if times get tougher.

[rgap 0]

Chris, Dave - thanks for taking the time to reply.

I've come to pretty much the same conclusion over the last 48hrs so its very reassuring to log back in and see you two validating that decision. I'm starting the hunt for a broker tonight.

Thanks again