Hi everyone, hope you are all keeping well.
Capital raises are an important part of the investor business plan – particularly at the moment, when properties prices are likely to come down. So banking any excess equity allows the chance to get to the auctions and opt for some cash purchases or use it for deposit monies.
That said, currently lenders can have an issue with capital raising, particularly if an ongoing property is not on the cards.
The right choice of lender is really important when considering this.
We have recently completed on a case which all started and completed within COVID. The client had two unencumbered properties which he wanted to refinance WITHOUT any evidence of where the funds are going. He also wanted 70% LTV. This was all achieved in 6 weeks. We started with a desktop valuation, which was all that was available at the time although the confidence level wasn’t enough and we had to move lenders. In the mean time another option Had become available with a full valuation as lockdown eased and this allowed an extra 5% LTV. We completed a refinance within 6 weeks with this lender even with all the issues that COVID threw at us.
Both properties, by chance, had lease extensions, but those were not paid for out of the funding.
It really is important to understand what you are trying to achieve, before the lender is chosen. Lenders are still adjusting their appetite regularly, so keeping in constant conversations with them is really important for us to keep abreast with all the updates.
It’s also so important to consider the trade off between the LTV you are trying to achieve, and the interest rate. It may well be that we have to sacrifice something to allow you to have the funds to move on to your next deal, but looking at the bigger picture is key in this market.
Have a good weekend, especially if you are venturing out!