One of the biggest barriers to entry to property ownership is the deposit required to secure a mortgage.
Once that deposit is paid, mortgage options open up. But with a deposit running to 25-30% of the value of the property, how can investors minimise the pain and quickly reach their target of full ownership without the hassle and pain?
We understand this well – if it were so easy to get on the property ladder without the hefty deposit, most people would own numerous properties.
However, there are some unique and innovative options from APW which allow you to do this with relative ease.
Staged Payment over 24 months
APW property purchases, like most other properties, require a deposit in the region of 30%. This amount then is used to approach a bank for a mortgage. With the investor putting up a sizeable stake in the property, the bank feels comfortable in arranging the loan.
What’s more, with current regulations in the UK for buy-to-let mortgages, 25% is the minimum allowed, but 30% makes it a more attractive prospect for the bank, and therefore, more likely to be approved.
On a property at £110,000, that means buyers have to provide £33,000 in cash, with an additional £2,500 for legal fees.
With the completion date of these properties often two years in advance, this allows us to offer buyers the chance to pay in instalments or to combine a lump sum with instalments.
This means that for a monthly payment of £1,479 over twenty four months, the deposit can be paid – without the pain of a lump sum.
We also have, from time to time, properties come back which were sold but which for various reasons the buyer has withdrawn. Such ‘distressed’ properties come with a discount.
Properties without mortgages
We can arrange property sales with a 30% deposit, and these properties will pay themselves off using rental income over 15 years, provided you overpay with the rising rental income to reach this target.
But another payment structure is getting a lot of interest with expatriate investors who don’t want to deal with a bank and a mortgage.
With a 50% downpayment – again, financed through the instalments of 24 months – the remaining 50% can be paid off through rental income alone. This means there is no need for a mortgage whatsoever.
And even better than this is the ‘no void guarantee’ backed by insurance that accompanies each new property, meaning that – even if there is no tenant to move into the new property immediately – the repayments are covered for a period of 5 years.
Safeguards for investors
APW has a number of important safeguards for investors:
- All client funds, paid in in the form of instalments, are held in escrow so they are entirely secure
- ‘Step over’ insurance is in effect – which means that should the builder become insolvent during the development, the insurance policy will provide a new builder at no additional cost to the client
- All new properties in the UK come with a ten year warranty by the National House Builder’s Council
Lowering barriers to entry
With payment plans and safeguards in place, now is an excellent time to explore the UK property market as an expatriate investor.