Hi BP Community,
I'm new to bigger pockets, recently found the podcast and loving it.
I'm originally from London and have been living in New York for the last 2.5 years.
I've saved a chunk of money to use as a deposit for a house, but I'm looking to buy in the UK and because I'm living abroad mortgage providers will only provide me with 75% LTV.
This makes it harder for me to buy in the area of London I want.
Does anyone have any advice on finding financing at 80% or 85% LTV?
Short version : find an independent whole of market broker. Preferably one that's been recommended by an investor. Those LTV's do exist today if you fill certain lending criteria.
Lending criteria has changed a huge amount in the UK in the last 15 or so years. Equally so has the BTL business model. London for a first BTL is not necessarily the optimum choice as values are huge and yields are typically less than 5%. This makes the LTV almost immaterial due to mortgage stacking formulas. You could find that not only do you gain a better deal (discount / profit at the point of purchase) and better cash flow (profit you can spend or use in the future to enable refinance and draw down a tax free lump sum) but also gain from a faster rise in capital value outside of London. These are typically greatest in regeneration areas where the house price to earnings ratio is more favorable and money is being spent making them more appealing with better amenities. This effect has been seen in Leeds Manchester, Liverpool and many more that have undergone a positive transformation.
FYI 'According to research by Zoopla, the rate of house price growth in the capital has increased to 0.4 per cent annually, up from 0.2 per cent last year.'
Given inflation is about 1.9% London property is not keeping up even when you take the net rental profit into account.
All of this in mind there may be alternatives that suit your needs better to reach your investment goals. What are you aiming for? What is the investment goal and time frame? Could a HMO in a city provide more? Could adding value be more profitable or enable cash out to go again faster? How much involvement do you want to be having while based so far away? Might a fixed return, fixed period investment provide a better return in a more manageable fashion?
Many of the investors I've spoke to in the past 2 years have been supporting London property and preparing for the potential shortfalls in rent to mortgage payments, should interest rates rise, by securing the low London yields by hedging outside in areas achieving upwards of 8% yield. Others have diversified into 'armchair / hands off' alternatives e.g. 12 month term 12% return products that are tried tested and have a proven track record with asset backing for security.
Don't get me wrong, for 15-20 year long term investment the London Market will perform as it has over the past 20+ years, well. But if you are just starting out and based overseas, there may be alternatives that provide greater short term return with less input that better suit your needs.
Equally this Brexit shenanigans could affect the market adversely and it would be a pity to jump in as if it were 2006 and then have to weather the storm rather than wait and buy in at the optimum point. Its not like prices are rising and delaying the first purchase is loosing huge capital growth and profit right now.
If you want to have a natter about the options and your goals and aspirations please do reach out and i'll endeavor to provide information and assistance where possible.
Exciting times for you and don't forget; you only start making profit when you have invested, so don't take years deciding as its costing you.
All the best,
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