Investment property financing can take a number of different forms, depending on the specific circumstances of the investor and the deal itself.

Some of our property investing clients are cash rich, and at the moment find a better home for that cash in property, where the returns are far more lucrative than bank interest rates, accepting the comparative levels of risk involved. Even long notice access accounts are only carrying relatively small returns for these clients and, providing that the buying process is efficient (i.e. There are verifiable and genuine discounts OR gifted equity in the property), this is an effective financing method.

More usually, investment properties for sale are purchased using mortgage financing. Current rates for new loans are not at their most attractive, and lending criteria is strict in comparison with previous years. However, there is still the opportunity of leveraging your investment property financing, as there are still mortgage products at 80% loan to value and more for homeowners and 75% lending for buy-to-let investors. Again, with the right incentives to buy, the overall costs of finance can be reduced to acceptable levels.

Some investment property financing gurus are currently focusing on “rent to buy” schemes which, when executed well, can negate the need for new mortgage lending completely. This has the benefit of helping distressed home owners move on, with good quality buyers able to complete purchases on option even if they cannot qualify for a new mortgage at present.

I’ll cover property options in more detail in subsequent posts, as I have noticed a lot of interest in the topic whenever its mentioned here. The mechanics are not complicated, and the necessary legal forms and processes are already in place in the UK, but the circumstances for both buyer and seller need to be right, with both motivated to achieve a desired outcome through negotiation.

How are you finding your investment property financing at the moment? As ever, feel free to leave a comment…