Maximising your profits from your property portfolio is essential to a successful property investment journey. Below, we cover the top FAQs we hear on capital raising to give you an idea of the options available to you.
Can I use the equity in my current buy to let property to purchase a second one?
Absolutely. This process is known as capital raising, and it’s extremely popular amongst landlords looking to expand and diversify their buy to let portfolios. Our brokers will talk you through the process, but you will need sufficient equity in your existing property to cover the deposit for a new purchase. You will also need to remortgage your existing property onto a new rate at a higher loan-to-value, which will likely increase your mortgage costs.
Our expert brokers will find the best rates for your current and future property investments.
Can I use the equity on my home as a deposit for an investment property?
Yes, you can. Many first-time landlords use this method to help kickstart their property investment journey. Just like capital raising on an existing buy to let, you will need to remortgage your home onto a new mortgage rate as part of this process. Our expert team of homebuyer mortgage consultants have a fantastic understanding of both residential and buy to let mortgage rates on the market, making us best placed to support you in this process.
For more details, read our case study here to find out how we secured our client an interest-only home remortgage with a capital raise to fund a new buy to let purchase.
How much equity do I need in my current property to fund a buy to let purchase?
Typically, you will need to put down a 25% deposit on a buy to let property purchase. Competitive pricing for buy to let property starts at the 75% LTV mark, but you may be able to access a rate at 80% LTV. Lenders will vary on criteria for first-time landlords, so it’s important to discuss your plans with a broker.
Explore the types of buy to let mortgage rates you could access here.
Can I use the equity in my property to fund home improvements?
Yes, many lenders are comfortable letting you raise capital from either your own home or your buy to let property to fund refurbishment works. Depending on the extent of the improvements you want to make to your property, you may need to get refurbishment finance in place.
An expert broker will be able to find you the best finance for your needs. For example, read how we secured a remortgage for an older borrower to fund some overdue home improvements, including a full kitchen and bathroom renovation, in our case study.
What are the typical mortgage costs associated with capital raising to fund a new buy to let property?
Before deciding to capital raise to fund a new buy to let purchase, you will need to consider several fees and charges.
For your home mortgage, you’ll need to consider whether your remortgage will incur any Early Repayment Charges (ERCs). These are typically set as a percentage of the loan amount on a sliding scale, reducing annually as you approach the end of your fixed rate term. It’s important to consider whether waiting until your current fixed rate ends rather than paying these additional charges is more cost-effective.
For your new buy to let purchase, you’ll need to factor in the typical mortgage costs:
- Lender arrangement fees
- Valuation and Legal fees
- Broker fees
- Your deposit
Is there a limit to the number of buy to let properties I can own?
No! You can own 10 or 100+ buy to lets; it doesn’t matter. It’s worth noting that once you own upwards of four or more properties, lenders view you as a ‘portfolio landlord’. This can restrict the number of lenders you can access; however, many specialist lenders are comfortable with portfolio landlords. Working with our expert buy to let brokers saves you time and money in the application process, as we will direct you to the lenders we know are most likely to accept your case.
How can I capital raise for property investment?
If you’d like to discuss how capital raising could help you fund your first property investment venture or a new one, then get in touch with our expert brokers. We can look at your current property assets to find the most cost-effective and profitable way to raise the finance you need, securing the best mortgage rates in the process. Call us on 0345 345 6788 or submit an enquiry here.
What next?
Are you looking to secure a buy to let mortgage? Head over to our easy-to-use buy to let mortgage calculator to compare rates or get in touch with one of our BTL mortgage brokers.
