engage magazine issue 006/\'08 - Page 72

72 FINANCE Raising Capital Making good use of property If If you wish to access the value in your home, the best thing is to firstly contact your existing mortgage lender to see if they will consider a further advance i.e. increase the amount of lending to you, thereby giving you some extra cash in your hands. If this is not viable, then a re-mortgage may be the next option to consider. This method may not be best if you are part way through a fixed rate period with your mortgage, as a heavy redemption penalty may apply if you redeemed it in the near future. Access to the equity that you’ve built up can be through a secured loan (sometimes called a home owner loan). The term can either be the same or shorter than that of the main mortgage or shorter. People also use this type of finance for home improvement or debt consolidation so as to reduce their regular outgoings. As we move into 2008, many small owners may be pondering how they can raise needed extra finance. What they may not realise is that there are a variety of ways to raise money against the equity in their homes. Says Nelson Valentine, Hambledon Loans & Mortgage Solutions finance Changing the subject slightly; you may be one of the many people who are interested in making money in property for either personal or business purposes. Have you considered using a short term finance arrangement? Bridging loans have traditionally been used to provide finance for someone who is purchasing a new home, but has not sold their original one, but many people are now using this facility as a solution to raise finance for a commercial property or a domestic property that they are buying perhaps at auction to re-develop. I would stress that this will not be right for everyone, but worth considering. Rather than tying up their own funds, some investors take out a bridging loan to purchase the property at auction. Their own money can then be used to renovate the property. Once done up, the property is naturally worth more, and can be sold quickly, or remortgaged at the new value (and rented), and the bridging loan and the accrued interest can then be paid off. Bridging loans are short term arrangements, and of course, not the cheapest type of property finance – typically interest will be charged at 1.2% per month, but this can be costed into the project, and there is no early redemption penalty. The market is now very competitive; loans can be arranged within days by some lenders. Of course, you should always think carefully before securing borrowing against your home, but the above could be considered if you are confident in getting a good return on your investment and have exhausted other options. After all, it could be argued that if you don’t want to put your own cash into a business project, can you expect anyone else to? For more details on the above types of loans, visit: www.hambledonloans.co.uk, where you’ll find an initial enquiry form. If you prefer, call 020 8771 3520 or 07737 256 429. engage | uk ISSUE SIX 2008