Planning ahead with a Forward Funding Facility
Let’s suppose you are applying for a Buy to Let mortgage for a new property purchase and you plan to buy more properties in the near future; or, maybe you are applying to remortgage an existing Buy to Let to release capital which you will use as deposits for future purchases.
Why not take the opportunity at the same time to apply for a facility sufficient to cover the expected additional new mortgages?
As a simple example, lets say you are raising a mortgage on an existing unencumbered property to raise £200,000. You plan to use the cash raised to purchase 4 additional properties at around £200,000 each putting in a 25% deposit on each. So your initial mortgage application is for £200k and you anticipate needing 4 further mortgages for £150k each – a total of £600k. It’s possible to request a forward funding facility of £600k on top of the initial £200k application.
So you now have your funding in place which means:
- A shorter and quicker application process for further properties
- You are in a strong position to negotiate your purchase because you can demonstrate availability of funding and promise quick completion
- You can even consider, for example, auction purchases
Of course the property itself must be acceptable to the lender and a valuation survey will be required but as an applicant you are pre-approved. Applicants must be ‘portfolio landlords’ i.e. own more than 3 let properties and can be individuals, partnerships or limited companies.
There is no additional cost in setting up the facility so it really makes sense to do this.
Contact ibmco for further details