Case Study – 100% funding – Full transparency

Case Study – 100% funding – Full transparency

12:03 PM, 5th October 2013, About 11 years ago 25

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Case Study - No Money Down - Full transparency

We’ve all heard of those ‘no money down’ schemes (mortgage fraud scams) where a ‘property sourcer’ has negotiated a discount and the buyer and his friendly mortgage salesman gets a mortgage based on the normal market value.  Many were very active in this market, some still are, however ……

….. what is not so widely reported – mainly because the shrewd investors who use the following strategy don’t normally shout about it – is the ‘cross charging’ 100% capital raising process which allows for the full purchase price, refurbishment costs and subsequent buy to let remortgage (if keeping the property) all to be arranged in a transparent and legal process, often all with the same lender.

How do I know about this?

Because we’re doing it, and I have a case study to share with you …

Case Study for a 1st and 2nd Charge combined arrangement

Our client required a deal they couldn’t get via their usual high street lender. He was looking to buy a property, renovate and then take out a BTL based on its new and improved value.

Crucially, and the main issue that nearly caused him to lose this opportunity, is that he was also limited in the cash required to secure this deal, although he had a good level of equity in his main residence.

Our client ideally needed to borrow 100% of the purchase price and 100% of the renovation costs using the equity in his home as additional security. Once renovated he wanted a quick solution in changing the bridging loan into a BTL.

  • Our client owned his residential property with a value of £600k
  • Mortgage outstanding £300k with Halifax
  • Purchase price of the property currently worth £150k
  • Refurbish costs £40,000 – Renovation including new kitchen and bathroom
  • Total borrowing required £190k

The solution?

First, to borrow 75% of the new purchase which gave him £112.5k

Second, the shortfall of £37.5k towards the purchase and the additional £40k needed for the renovation works (£77,500 in total) was raised by adding in the additional security via a 2nd charge on the main residence.

He was actually offered a 2nd charge bridge on his residential property up to 70% LTV, which meant he could, if he wanted to, raise up to £120k from this property (70% = £420k, his existing mortgage is £300k), far more than enough to make up the required difference (£77,500) to cover the full 100% of the purchase and 100% of the renovation costs.

The valuer was booked to attend the property within 72 hours.  In the meantime our client was quick in supplying the shopping list of requirements required and forunately instructed a solicitor who understood the speed required for a bridging loan. The deal was completed within a few weeks enabling our client to ‘do up’ his new property, increasing the value to £300k.

Three months later our client was able to change the bridging loan product to the lenders BTL product, releasing 75% of its new improved value. This released £225,000, enough to pay off the bridging loan and put some money back into his cash flow.

This is the intelligent, new improved, ‘no money down’ style of investing and refurbishing which is helping many savvy investors to add property to their portfolio without laying out any of their own liquid cash.  Instead, they are letting their own existing bricks and mortar do that for them.

We are now very closely associated with a leading and award winning bridging loan / short term lending packager who specialise in these cases.

We have a very simple enquiry / AIP process and as highlighted above, cases can be processed very quickly indeed.  In this case, after 12 weeks of work, our client ended up with another property in his portfolio and also approximately £20k in cash (after fees etc) as well.

Could this be of interest to you?

Contact Howard Reuben

Mortgages, Commercial and Bridging Finance, Life Insurance, Wills, Trusts and LPA's

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Mark Alexander - Founder of Property118

12:13 PM, 5th October 2013, About 11 years ago

Superb case study Howard and a strategy I used many times for my clients when I was a practising NACFB Commercial Finance Broker (like yourself) prior to my retirement.

I am delighted to hear that lenders are coming back into the market and offering the full package end to end. For several years now I understand that such deals have had to be pieced together using multiple lenders and the fees associated have made it more difficult for deals like this to "stack up".

I hope you get a lot of business out of this my friend and we are sincerely grateful for the donations you have made to support the running of this forum which now run well into a five figure sum.

Sharing is caring and we are also very grateful for the effort you have put into responding to several "Readers Questions".

All the best.



Vanessa Warwick

12:15 PM, 5th October 2013, About 11 years ago

Interesting story Howard.

However, there is just the small matter that the guy had a £600K home to leverage against.

Most newbies trying to get started in property with no money don't have that luxury.

Also, with respect, I find it very hard to believe that you could double the value of a property by spending £40K on a minor refurbishment.

If you extended it etc. then maybe ... but not through a new kitchen and bathroom.

The valuer would look at the original purchase price, the receipts for money spent, and value it around the addition of the two imho ... he would be very unlikely to value it £100K more than the combined spend!

Whilst I appreciate an actual example, this kind of post perpetuates the myth that you don't need to put down a deposit.

Your guy got 100% financing but there would have been bridging loan costs, acquisition costs etc, that you have not included.

This post on Property Tribes gives some reasoning behind my concerns about this type of post:

Also .... Should your post be labelled as an advertorial?

Mark Alexander - Founder of Property118

12:59 PM, 5th October 2013, About 11 years ago

Reply to the comment left by "Vanessa Warwick" at "05/10/2013 - 12:15":


Howard did NOT pay to run this article, it was submitted in good faith to me as an email and I slightly amended it and add my supportive comments below as a thank you to Howard for the massive support he's provided to this forum and also for the benefit of our readers to show what can be achieved.

I have no reason whatsoever to doubt anything Howard has said. Such deals are not easy to come by but they are around, I have done them myself and many of my family do deals like this full time. You will rarely find them posting on forums because they are too busy doing what they do.

I agree that some newbies (NINJA's) should NOT be in this business.

PS - NINJA = No Income No Job or Assets.

Howard Reuben Cert CII (MP) CeRER

18:24 PM, 5th October 2013, About 11 years ago

Reply to the comment left by "Vanessa Warwick" at "05/10/2013 - 12:15":

Hello Vanessa

I have emailed you via your own website, to clarify a few 'misinterpretations' that you have stated above.

Kind regards


Vanessa Warwick

18:58 PM, 5th October 2013, About 11 years ago

Hi Howard,

Thank you for your reply and also your private email.

With respect, I never mentioned mis-representations. I merely asked some questions to bring clarification to your strategy. I have no reason to believe that anything was mis-represented, although I do believe that there were omissions about the actual acquisition costs. You have informed me privately that you never intended this to be a post, it was just an email to Mark, and he chose to publish it, so its understandable that some of the detail is missing. But that can easily be rectified now I have asked the question.

I think it would benefit all to have the debate in the public domain, not via private email.

Mark Alexander - Founder of Property118

19:26 PM, 5th October 2013, About 11 years ago

Vanessa, £40k is not a minor refurbishment, take a trip over to Kings Lynn and I will introduce you to my brother and show you the bungalow project he's currently working on if you wish. It is 100% financed by former purchasers of his previous developments, no bank lenders whatsoever. I think your exposure to discussions regarding scams over on the Property Tribes forum may have made your overly cynical. Come and have a look and see how the true professionals do it.

You have met Paul Spriggins and know what he has achieved in terms of his 10,000 unit portfolio. Remember, he started with very little and he's still only in his 30's. it can be done.

Neil Patterson

21:27 PM, 5th October 2013, About 11 years ago

Hi Howard,

Very interesting as I often get asked on development finance questions if you can use a second charge on other property with equity when cash is short to cover typical 65% to 70% max LTVs as I know this has been difficult in the past.

First quick question if you are Ok to answer as I do not want to push confidentiality.

Did the client have anything to do with the building industry as he was able to add so much value for so little cost or was it a bargain purchase in the first place?

Vanessa Warwick

22:43 PM, 5th October 2013, About 11 years ago


I don't understand your points.

I didn't say it couldn't be done. For the record, I am not questioning Howard's integrity in any way. I am digging into the practicalities of what has been shared.

I stand to be corrected, but crunching the numbers suggests to me that the property would have had to have been purchased 40 to 50% BMV in order for this strategy to work.

Is it possible ... YES.

Is it likely that the average man in the street can replicate these results ... NO.

I am not overtly cynical. Who wouldn't want to be able to buy property NMD in a legitimate and transparent manner? Bring it on!

However, I won;t be getting in the queue on this occasion because I don't have a £600K house to leverage against, and I can barely find properties with a 10% discount.

Maybe I am just a useless investor because I've been in the game nearly 10 years and haven't retired yet, when all the wealth creation gurus retired after three years.

The good thing is that I am at home, sitting on my bed with my cats, not spending the weekend in a hotel trying to sell courses.

I want to differentiate Howard's strategy from the other less transparent NMD schemes doing the rounds and there is nothing wrong in bringing clarity to who this scheme might work for, and who it won't work for imho, because it won't work for everyone. But for those who can meet the criteria to make it work, its sweet.

Mark Alexander - Founder of Property118

23:17 PM, 5th October 2013, About 11 years ago

Howard and I have both been landlords for a lot longer than that too Vanessa, we don't run wealth creation courses either.

The project my brother is now working on is a probate sale of very tired bungalow. Purchase price £183k and he will completely gut it, add 60% to the size by extending it and landscape the gardens for another £50k all in. It was financed through private loans from former purchasers and £60k of his own cash. Within a few weeks of beginning the development a friend of one of his previous purchasers said she want to buy the property, the price agreed is £325k and they should move in by Xmas.

I'm not saying its easy and my brother has been in this business for 25 years. He doesn't have a £600k house and a £300k mortgage but he does do a deal like this every year and lives a very comfortable life and very long holidays.

I'm really can't see what you are getting at with your posts and they may just appear to some people to be sour grapes. Is it any wonder that people like Howard and my brother rarely share what they do if they think they are going to get cynically questioned and associated with wealth creation gurus. There are plenty such gurus about who deserve to have their business models disected to prove they arr a scam as evidenced on Property Tribes but that's your niche I suppose, it's not ours.

Adam Hosker

1:19 AM, 6th October 2013, About 11 years ago

Mark & Howard, if you like this you would love what we are about to announce.

The same scenario, but instead of a "Bridge" on the main residence at high rates as we know. We have a 2nd charge Home Loan product that has a monthly fee of £0 charged at 0 Interest rate - no typos.

Lender gets their commission on resale / remortgage based on increase in property value, max term 25yrs.

Just completed the Training / Exam to offer the product a few weeks ago.

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