Closed Bridge Closed Bridging Property Finance
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New 100% Finance Product - Purchase An Unlimited Number Of Bargain Properties No Money Down...
The single biggest question I get from property entrepreneurs is "how do I raise the finance to buy bargain properties?". I'm sure it’s a question you've asked somewhere along the line and makes for an especially tricky problem if you do not have a team of private investors backing you.
There is now a quick and cheap solution in the form 100% finance based on the value of the property and not what you have agreed to pay (no matter how far below market value)...
This 100% Financing Is Achieved Through Something Called 'Closed Bridging'...
Its totally legal, the lenders know what's going on, costs are fixed.
How Does It Work?
It's very simple and straightforward. You will end up buying the property (in your name) using someone else’s cash in the morning and then remortgage based on the true value of the property later in the afternoon.
This will allow you to then own the property having used none of your own money and 100% finance from the mortgage lender. This is in essence a 'closed bridge'.
For example: You want to buy a property no money down worth £100,000 and you can get it for £80,000. You to apply for an 85% remortgage on the property based on its value of £100,000.
Once you have the valuation and mortgage offer you then proceed to the next stage. On completion day you will buy the property cash for £80,000 in the morning and then remortgage based on the true value later in the afternoon.
This remortgage releases £85,000 which pays off the £80,000 borrowed + interest Remember, you've put absolutely none of your own money down...
The Remaining Cash Is Yours To Keep.The Property Is Now Yours No Money Down.This Can Be Used On Any Property Anywhere In The Country!
"Why Bother With Closed Bridging?"
Closed bridging is particularly useful if you want to buy a bargain property without putting any of your own money down. To buy a bargain property yourself and remortgage later is a good strategy but you will need to put down a deposit for at least a few months.
Then you run the risk of not getting a high enough valuation from the surveyor which means you could have your money stuck in a property for many months with no way of getting the funds out.
Also, closed bridging allows you to complete on a property very quickly (once the valuation and offer have been confirmed) giving you an edge over your competition.
As you know, mortgage lenders usually lend based on the lower of either the purchase price or market value. If you are buying bargain properties, then you will not be able to borrow against the true value of the property giving rise to a delay in getting your deposit funds out.
"Sounds Good. Can I See A Case Study?"
Here is an illustration to show you how an example deal would work and what the rough costs would be.
Market Value of property £100,000
Purchase price (20% below market value) £80,000
Equity £20,000
Purchase Costs*
- Legal fees for purchase -£485
- Private finance charge 1% -£1,000
- Mortgage broker fee -£300
- Stamp Duty -£0
Total Costs -£1,785
Remortgage @ 85% of Value £85,000
Less repay bridging loan -£80,000
Less purchase costs -£1,785
Less Legal fees for remortgage -£485
Cash back after remortgage £2,730
Built in Equity £15,000
* The only other costs you would need to cover are valuation fees, insurance fees and telegraphic transfer. These vary from deal to deal.
Advantages Of Closed Bridging The No Money Down Way...
1. True no money down deal...
2. You'll know the amount of remortgage money you will get before you complete on the property as the valuation will have been carried out before exchange...
3. Grow your portfolio as fast as you want no need to worry about deposit - buy an unlimited number of properties using other peoples money...
4. Save on stamp duty as compared to a gifted deposit. With this method you only pay stamp duty based on the purchase price not on the valuation...
5. Interest on full purchase price deductible against income from rent...
Here are some quick points to remember:
1. You'll need to get the property at least 17% below market value to get you 100% no money down. If you don't get it that much BMV and you don't mind putting a little bit of money down then this will still work very well for you in exactly the same way as described above.
2. A fixed 1% of the funds lent (minimum £1,000).
3. Tax Advantage: by acquiring the property with a 100% finance you will benefit from having 100% of your mortgage interest payments allowable against your rental income for income tax purposes.
Kind regards
Manan Aslam
www.property-finance.com
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