a cheaper way than a 25% deposit?

Question

When investing in a property, you need to give at least 25% deposit to the bank for a buy to let mortgage. Is there a cheaper way to do this or somehow give a smaller deposit such as like 5 thousand pounds? any ways except lease option agreements.

Kerry Baird · Answer

I used a search engine and found BTL mortgages at 20% down, with the wording "Small deposit buy to let mortgage."

Perhaps a small local lender will do better for you than the large national lenders.

Other than that, look to family and friends as partners in raising those funds.

Or get started by owner occupying, improving and selling on, and use those funds to begin your BTL purchase.

Lastly, buy as an owner occupant and rent other rooms out to increase your income; save that up for your future deposit.

Rachel H. · Answer

@Usman Ahmed You could always ask to see if the owner is willing to finance the deal. Private money and hard money lenders are other options. Good luck!

Frank Chin · Answer

There are many ways, ranging from seller financing, rent to own, master leases with option, long term triple net lease etc.

The main obstacle to all these wonder methods is the seller doesn't need the money right away. If the seller is in need of immediate money, say to pay for medical expenses for instance, seller financing is not going to help him one wit.

As to 25% down, loans here in the USA are immediately sold right after they're made, and buyers of the mortgages generally require the 25%. You would have to go to banks that grant portfolio loans, that's loans they keep on the books. Here again, it's normally country banks sitting on a lot of money that they don't need right away.

Looks like the common thread here is looking for folks selling that don't need the money, or banks with too much money laying around, they are happy taking a piece of paper from you, i.e. the mortgage note. Some years back, we went through a period here where banks give mortgages with almost no down, and the resultant bank crises almost took down the economy. I bought foreclosures from banks on properties at better times going for over $100,000 for under $40K, with banks holding worthless mortgages. The nice thing is they gave me a portfolio loan to unload the property.

a cheaper way than a 25% deposit?

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