What are the best mortgages for property developing?

Posted on 7 October 2007

I'm wanting to do property developing full time and have already completed 2 property's in the last 6 years in my spare time as a hobby but I'm wanting to do it full time now. I'm self employed and need to know what sort of mortgage i need to look for as i don't want to re-mortgage my marital home, only the property I'm buying.

As long as you have a lump sum cash deposit to work with this should be fine. For a £200,000 property,, a 25% deposit would be ideal, so about £50,000.  If not, you may have to raise it out of your home because neither semi-commercial renovation mortgages nor buy-to-let mortgages are not available at 100%.  After that you would just be able to take a semi-commercial renovation mortgage or buy-to-let mortgage depending on how long it's going to take you to renovate it and whether you intent to sell it or rent it out.   If you can get yourself started with a 25% deposit you should be able to take advantage of the best deals.  15% will suffice but the choice of lenders will be smaller so the rates won't necessarily be as good. 

Get yourself a relationship going with a good broker (if you want to use Charcol our sister company John Charcol deals with such specialised things 0800 71 81 91) and he/she will be able to agree you each mortgage, or even move the same mortgage on each time you sell and re-buy. Basic needs would be one with no Early Repayment Charges, but you should also have a chat about Offsets which are good for these projects, or perhaps an ongoing 'credit facility'.

It sounds like an excellent plan, best of luck with it.

Katie.

Categories: Commercial, Self-build

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