January 2016 - First 4 Commercial

What do I need to know about investing in property?

Investing in property can be a good way of building an extra income or as funds for a retirement plan. There are various different options available on the financial market. Here are just a few that you could consider. Always talk to a professional advisor first as an expert will be able to give you in depth knowledge on any pitfalls or gains depending on what direction you choose to take for your investment portfolio.
• Direct property investment.
This is when you buy your own property to let out, a buy to let mortgage is a good option to consider if you will not be living in the property yourself.
• Indirect property investment.
A Property Open Ended Investment Company (OEICs) and Property Unit Trusts are schemes where investment funds are pooled into one fund that invests in a property portfolio. It either invests directly and or purchases shares in companies that invest in property. These are all regulated so there are safeguards put in place that will reduce risk of financial loss.
• Collective investments.
This includes investment in other financial arenas that don’t just involve property. A trust will also look at life assurance policies, shares and government bonds and spread the risk. Again these are also regulated by the FSA (Financial service Authority)
• Getting the right advice.
Before investing in any scheme you should always get professional advice. Investment will always carry risk so discussing this beforehand will help to minimise any potential issues.


How do lenders decide how much I can borrow when I want to take out a mortgage?

Once you have found that perfect property finding the right finance to suit your needs and budget is the next step. There are a number of criteria that a lender will look at before offering you a mortgage. They will investigate your earnings, monthly commitments, other outgoings, the value of the property and your credit history. Basically you will need to prove that you can afford the repayments on the loan as well as the one off costs of buying a property such as administration fees, solicitor’s fees and stamp duty.
• How much you earn.
Lenders will work on an affordability assessment when calculating how much you can borrow. It’s not necessarily about how much you earn, it’s about how much you can afford to repay per month.
• The value of the property.
The lender will value your property and check how much it is worth. Some lenders will limit the amount they will lend for example on a timber framed property, so it’s worth approaching a professional who will be able to discuss all of these points with you.
• Credit history.
This is important, if you have been bankrupt, have CCJ’s or had past problems with repaying loans or bills, this could adversely affect how much money and on what terms you can borrow. However it does not mean that you cannot obtain a mortgage but the risk will be higher to a lender and therefore reflected in the terms of a mortgage. Understanding your credit score is vital.


What types of mortgage are available?

When you embark on the process of trying to find the right mortgage to suit your needs it can seem like a mine field. There are so many options on the market that reflect pretty much every circumstance imaginable, if you are buying a plot to build on, re-mortgaging, a landlord with a portfolio or buying your first home, choosing the best fit mortgage is paramount. The long term financial commitment is important to consider, how will you repay your mortgage? Will it be interest only for a period of time? What are the best interest rate deals? Do you require special features? What if you want to pay your mortgage off early? These are all questions that you need to ask yourself and will be required to answer by an advisor.
Here are a few basics on the different types of mortgage available on the market currently:
• Repayment mortgage.
There are basically two ways of paying off a mortgage, one is repayment and the other is interest only. A repayment mortgage allows you to make monthly payments for an agreed term until the loan and the interest is paid off in full.

• Interest only mortgage.
Monthly payments are paid for an agreed period of time but they only cover the interest on the loan for the property. They do not chip away at the amount you owe on the property. Normally you would pay into another investment plan that would pay off the full loan at the end of its term.

• Interest rate deals.
It’s also important to look at the interest rate deals on offer too. A standard variable rate means that your mortgage will go up or down depending on the lenders standard rate of interest. This is normally in line with the Bank of England base rate. Discounted rates offer a lower rate of interest at the beginning and then move to another rate after a set period.


An award winning year for first4commercial.com in 2015

We are looking forward to continuing our success from last year into 2016 and beyond. As usual we helped hundreds of clients with their mortgage and finance needs in the Commercial, Buy to Let and Bridging Loan sectors. Using our expertise and industry knowledge to provide the best rates, and advice to our clients and introducers.

We received three industry awards throughout 2015:

  • Most Outstanding Independent Commercial Finance Specialist – Corporate Livewire Awards
  • Best Commercial Finance Broker 2015 – UK – Acquisition International Awards
  • Best Independent Commercial Mortgage Brokers 2015 – Real Estate & Property Awards

We are very proud to be recognised for the hard work and dedication we provide to every client. With our FREE no-obligation quotations and our bridging loan lender panel in excess of 70+ lenders, we will continue to provide the best advice and market leading rates throughout 2016.

We wish all our clients, introducers and lenders a happy a prosperous 2016 and look forward to continuing where we left off.

If you have any queries or cases you wish to discuss please call the team on 01277 620083.


Development Finance And What It Entails.

Getting access to competitive funding for a development project is easier than you would imagine. So whether you are knocking a property down, starting from scratch, constructing a multi dwelling or building a commercial site, there are a plethora of financial options available.

So how does it work? It can be watered down to a few simple stages. Firstly the lender will consider the value of the land, finance can be raised against the purchase cost or the value of the land if it is already owned. Once this has been established, the funds are released over several phases of development which are;

• The initial costs of the build, which cover the footings and foundations of the development.
• The next phase of money should cover the basic external structure of the construction.
• Once the project is ready to be made water and wind tight, i.e the windows and roof are ready to be put into place, the next stage of funding becomes available.
• Plastering and electrics are next on the list, this is known as the 1st Fix.
• 2nd fix funding is released when the project is ready to be painted and decorated. This also includes any landscaping.

What makes a project viable to a lender? The lender will consider the following factors when deciding on feasibility.

• Initial valuation and cost of site.
• The cost of the built itself from inception to completion.
• GDV (Gross Development Value) this is either the expected sale value of the site once completed or the revenue that it will afford the developer.

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