Investing in property is one of the best ways to protect money and to see decent returns. But if you’ve found a property that ticks all the boxes for your next investment, you might need to get the cash together fast.
Here are some of the best suggestions for how to raise funds fast for a buy-to-let.
Perhaps the most obvious suggestion if your own home has risen in value is to remortgage it. Although you’ll only need enough for the deposit on your buy-to-let, this option isn’t without its risks.
First, more debt means higher interest payments. Second, the amount you can borrow will either be capped by the property’s rental value or by your income. This depends on whether you’re remortgaging a rental property or your main home. Of course, make sure you seek financial advice before going down this route.
This option won’t be open to everyone, but if it applies then it’s definitely worth considering. Over 55s can withdraw their pension in a lump sum to be used however they wish, including as a deposit on a buy-to-let.
Once you reach pension age, you can take 25% of your pot out tax-free (does anyone remember the newspaper headlines of 60-year-olds driving Lamborghinis?).
Doing this can result in quite a chunky tax bill, though. You might be hit with both capital gains tax and income tax, and possibly inheritance tax. Speak to a tax advisor to see how much money you’d end up with, as it might be a lot less than you think.
Selling a property might be obvious, but if you have a current rental property that’s not giving you the desired returns, you might as well part with it. Of course, this option is dependent on someone wanting to buy, so you might not end up getting the cash together as quickly as you’d like.
4. Set up a joint venture
One of the most secure ways to raise funds fast is to set up a joint venture with someone to pool your resources. Split the returns based on how much you each invest or see if they’ll loan you the money at an agreed interest rate.
Be sure to always draw up a contract, and don’t let a business arrangement ruin a strong relationship. There can be plenty of reasons why business partnerships don’t work out, so bear this in mind.
5. Get an advance
If you don’t want to remortgage your main property, you could try getting a further advance from your mortgage lender instead. This will likely increase your interest rate, but it’ll usually be less than remortgaging does. Your lender will want to revalue your property and you’ll need to be in a good financial position for them to agree.
There are plenty of ways to raise funds fast for a buy-to-let, but none are without risk. If you have the time, it’s always worth speaking to a financial advisor to see what they recommend based on your specific circumstances. Whichever option you choose, make sure you’re aware of any red tape involved.