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Axis USA WebinarMedium Term Techniques - 6-12 months
These techniques leave you with a Low or No Money Down investment typically 6-12 months after completion of the purchase. Some investors have enough cash to carry through their investment plans for this period of time.
Refinance after 6-12 months
You may have used your own cash for the deposit, or used one of the techniques listed in short term techniques such as open bridging, asset realisation or joint venture financing.
Either way you now want to refinance and pull out your cash. Most mainstream Buy-To-Let lenders will let you remortgage after 6-12 months (it varies). And the remortgage is based on market value.
Here's an example:
|
|
Original Purchase |
Re-Mortgage |
Comment |
|
Property Value |
£100,000 |
£100,000 |
Unrealistic to expect a price increase in 6-12 months |
|
Investor Price |
£70,000 |
|
|
|
Mortgage |
£52,500 |
£75,000 |
75% |
|
Cash contribution |
£17,500 |
|
|
|
Costs |
£5,000 |
|
|
|
Total Cash Invested |
£22,500 |
Nil |
In this example can withdraw the full £22,500 contributed |
The process is the same whether you have used your money or someone else's money. The result is a Low or No Money Down deal depending on how the numbers pan out.
There may still be lending restrictions based on rental income so it's wise to check that your investment stacks up prior to purchase, to avoid any problems when its time to remortgage.
KEY - This refinancing only works because of the substantial discount achieved at the point of purchase. This will NOT work with properties where there is little if any discount.
WARNING - On some occasions the valuer may be unwilling to revalue the property at the market price if your purchase price was so much lower just a few months before. This is particularly the case where a number of properties in the same development were sold to investors, all at below market value prices.
What Is 'Buy And Refinance' Suitable For?
All property where you want to take out capital that was contributed to the deposit so that it can be recycled.
In every case it will be a Below Market Value purchase.
It might be a property:
- Sourced by Axis or another sourcing company
- Distressed seller you have found yourself
- Property requiring refurbishment that didn't fit on standard mortgage
- Property from Auction
Next Steps
Learn More... Long Term Techniques
Download the No Money Down Smart Guide
Download The 100% No Money Down Finance Guide
Where next?
