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Equity Loans
Equity loans are a quick and easy way to unlock value in your existing portfolio in order to expand or improve it further. Whilst there are equity loans aimed at homeowners, and we at Woodason Financial Services can also help with these, this page is more focused on landlords looking to use their Buy to Let property.
What is an Equity Loan?
An equity loan is just that - a loan that is designed to help you unlock equity in your property to be used for any legal process. These are designed differently to a more standard mortgage and there are a few different providers in the UK.
This is where a mortgage adviser can help ensure you get the right mortgage for your plans. At Woodason Financial Services, we will listen to what you need and want, creating a solution that achieves what you want.
Let us guide you through the process
The below is a general example of a landlord who is looking to unlock 10% of the equity in their current property, in order to finance a deposit for a further Buy to Let.
Property price today £ 500,000
Rental income £2,500/month
Gross Financing of £50,000
Valuation, searches, legal, arrangement fees (estimated costs incurred) £2,804
Landlord is paid upfront £47,196
Landlord pays monthly premium, subject to annual inflation adjustment etc of £250/per month - this is 10% of the monthly rent.
Scenario 1
In Year 5 the property appreciated by 15% in value. Property market value (say) £575,000
Landlord pays 14% of the market value £80,500 to pay off the loan
Scenario 2
In Year 5 the property price has remained the same. Property market value (say) £500,000
Landlord pays 14% of the market value £70,000 to pay off the loan
Scenario 3
In Year 5, you want to buy out the lenders right, with the property depreciating -15% in value.
Property market value (say) £425,000
Landlord pays 14% of the market value £59,500 to pay off the loan
The above are hypothetical scenarios, however the fees are based on a current offering - a 10% premium on the market rent being the monthly payment, and the total sum to pay off being 14% of the property value, plus fees.
This loan can also be provided very quickly and without consent from the current lender. This is a common issue for landlords looking to quickly secure financing to expand their portfolio.
Many of our advisers are also landlords themselves and therefore understand the different pros and cons with the many different options available. We can guide you through all your options.
Best of all? We will do this all for you without charging you a single penny.
Online mortgage calculators will not have the insight or knowledge that a mortgage adviser will - least of all one who is also a landlord themselves. Speak to an adviser today and ensure you are getting the right mortgage for your needs, and that you understand not just the benefits but also the risks involved, and how best to protect yourself against them.
At Woodason Financial Services we have in-depth knowledge of what is possible with each lender, including specific niche circumstances. For example, we could:
• Help you borrow up to 85% net of the price of the property
• Help you buy the property with a company
• Help you buy a property to rent out and retain your status as a First Time Buyer
• Help you or your child buy a property whilst at university and rent out the rooms - potentially with no deposit
• Help you invest in UK property whilst abroad
• ...and many more!
Contact us today and find out how Woodason Financial Services can help you, completely for free.
Our guides
Buying UK Property On A Visa
Our brochure will help you arrange finance without being distracted from your life. We are experts in helping clients in the UK on a visa buy property in the UK, whether you intend to live in it, or as an investment. Download it below, completely free.
Buying Your First Home Guide
This guide is a must-have for those who have not bought their own home. It explains and breaks down in plain English the steps needed to get a mortgage to buy your first home. Best of all, you can get it now for free by clicking below.
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IMPORTANT INFORMATION
Think carefully before securing other debts against your home. Your mortgage is secured on your home, which you could lose if you do not keep up your mortgage repayments.
We may charge a fee for mortgage advice in exceptional circumstances. The amount we charge will be confirmed before any charge is incurred. Please refer to the Terms of Business or contact us for further information.
woodason.co.uk is a trading name of Thanet Mortgages Limited which is authorised and regulated by the Financial Conduct Authority. Your home may be repossessed if you do not keep up repayments on a mortgage or other loan secured on it. Think carefully before securing other debts against your home. Not all forms of bridging finance, secured loans, buy to let and commercial mortgages are regulated by the Financial Conduct Authority.
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Registered address: 76 High Street, Brierley Hill, West Midlands, United Kingdom, DY5 3AW.
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