Obtaining finance in the current economic climate is difficult.
The purchase of a property is a long term investment. The initial money put into the investment to pay Stamp Duty, Fit Out Costs, Deposits and Legal Fees etc., are all tied up in the property until you sell it. While there are many seasoned property investors, these days a lot of new investors consist of parents hoping to buy one or two properties for passing on to their children at a later date.
Proper advice in advance is vital for the First Time Investor as there are many different borrowing structures and some are more tax efficient depending on the individual’s circumstances. The investor can choose from a normal repayment mortgage, endowment mortgage, pension mortgage or an “interest only” mortgage. In choosing an interest only mortgage, one can keep repayments low for the initial years as the lender only receives the interest on the loan and no capital is repaid during this period. Tax relief is available for the interest cost against rental income. The investor has the option to return to a capital and interest mortgage after a few years or alternatively put some investment vehicle in place to ensure there is a fund available to pay back the capital at the end of the mortgage term.
The most appropriate type of loan will depend on each individual’s own circumstances. We can provide advice on this matter by way of consultation.