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Finding the Finance
Finding the Finance
Once readily available, mortgages are now seemingly few and far between. For many of those interested in property investment, finding the finance to buy the property is sometimes the most difficult part of the process. However, mortgages are available – as long as you (or your adviser) know where to source them.
The recent sub-prime crisis has meant many banks have turned off the credit taps almost completely. Even financial entities not affected by the so-called toxic mortgages are apparently reluctant to approve home loans. This is a frustrating situation for investors – interest rates at their lowest ever make this an ideal time to borrow money, but this cheap credit is not readily available. Many property analysts believe that the tough mortgage lending criteria exercised by the majority of lenders has had the effect of excluding many would-be buyers from property markets all over the world.
Mortgage lending in many countries reached rock-bottom this winter with several countries recording the lowest figures for new loans on record. Spring this year saw a slight improvement – the number of new mortgages rose in the UK in March when Spain also saw a slight increase (1.2%). However, with several major banks still licking their sub-prime wounds and some others struggling to bring their balances back into the black, there is no sign that mortgage lending is likely to increase significantly in the near future.
What, then, is the solution for the property investor whose limited liquidity or investment strategies mean they prefer to finance some of their investment? Barry Aldridge, Director of Obelisk Private Finance, believes that part of the answer lies in the property. “Choosing to invest in a property directly from the developer can be advantageous since many developers have already secured finance for the properties and this financing can be taken on by the buyer,” says Barry, “although, of course, you need to look at the mortgage conditions carefully as they may not suit your circumstances.”
Barry also recommends using specialist mortgage providers or brokers with experience in sourcing mortgages in a country or specific area. “Brokers with an established track record have an extensive network of contacts with lenders, which usually means they can source a mortgage even when many banks are reluctant to lend,” Barry says.
Obelisk is well aware of the importance of mortgage availability. A case in point are Obelisk’s properties in Spain, all of which come with mortgage options (subject to qualifying status) of up to 70% or 80% of the valuation or purchase price (whichever is lowest).
Complimentary Brochure
To download our 2008 Private Finance brochure completely free of charge, simply complete your details below:
