Decide how much do you want to invest

If you choose to invest with a mortgage, now would also be the time to speak with a good broker and get a pre-approval to ensure you understand both the reality of what you can get mortgaged and what the costs will be.

Deciding how much you want to invest is very important at the start.

First look at your budget, how much do you have saved how much of that do you want to put into property investment? Do you have other investments that you want to move into property investments?

Second look at if you need or want a mortgage. If you do, keep in mind that for most investment properties you can only borrow up to 75% of the property value, depending on your financial position. The lower your Loan value is to the cost of the property, the more likely you will be to get a mortgage and have better interest rates.

Now will be the time to speak with a great mortgage broker who deals with investment mortgages (also commonly referred to as buy-to-let mortgages)

For shorter term projects, there is also the option of bridge loans and development finance where a regular mortgage would not be suitable or would not be approved by the banks.

How can the budget impact what you can look at in an investment?

Various types of properties fall into multiple categories of price ranges. You will have the options to look at smaller apartments and homes with a more modest budget, medium sized apartments and houses in a mid-range budget, and larger apartments and houses up to small apartment buildings with a more substantial budget. (for this discussion, we will not yet go into investing in large apartment buildings or large multi developments)

How can the budget impact where you can look for an investment?

As we all know, prices vary significantly by location. However, it’s often underestimated by how much prices can range, and the differences can be astonishing. The average sales price for a flat in SW3 sold in August 2017 was £1,7m compared to £208k for SE2. That’s a £1.5m difference in property separated by 12 miles.

Get your budget in order at the start; you don’t want to be struggling to find the money for expenses related to your investment halfway through the legal proceedings or while renovations are taking place.

Once you have decided on your budget, you can proceed to the next step, deciding how much risk you are willing to take on.

Kind regards,

Rian Strauss

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