19:57 PM, 9th October 2014, About 9 years ago 18
When I first heard that The Mortgage Works were offering a 2.39% buy to let mortgage rates I thought to myself; “yeah, yeah, yeah … here we go again … more headline rates for brokers to hook in more newbies”
Sure enough it comes with a 2.5% arrangement fee, it’s restricted to 60% LTV and the revisionary rate is whatever TMW decide they want it to be, because it’s not a tracker mortgage product.
At first I thought ….
Who in their right mind would fall for that!
But then … in a flash … a brainstorm … or more a mind fart perhaps … something occurred to me!
If LTV’s are 65% or lower, TMW will allow second charges 😀
Now this means that a further 20% LTV layer of equity finance could be applied, thus taking the LTV to 80%.
For a speculator who wants to get in and out of a deal in a couple of years, but milk the cashflow to death in the meantime, this could be just what they have been looking for.
Same goes for anybody wanting to maximise their cashflow for a couple of years before selling up, hopefully at a profit.
Yes you’d give up 40% of any capital appreciation over that two year period to the equity financier if you sell up or refinance in two years time, but if there isn’t any capital growth the cost of the deal is less than 2.5% a year for 80% funding (plus fees of course!)
Now actually that’s not bad ……
It could also enable you to do two identical deals at 80% gearing as opposed to one at 60% gearing. That would mean that you get 60% of any capital growth, which multiplied over two deals provides 20% more than just doing one deal. On top on that you can also double up any rental profits.
Want to learn more?
Well it’s going to cost you £200, but for that we will introduce you to our recommended Equity Finance brokers and also provide you with a spreadsheet we’ve produced to help you to analyse the viability of equity finance for yourself.
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