V
VALENTINO197
Guest
A group of six people has joined forces in setting up a company with intention in buying property for investment purposes. The company has no assets only €17k worth of savings. An investment opportunity arose in the last month in Sheffield, England. The options are as follows:
Option A to buy apartment worth (188k plus 3k solicitors fees and furnishing 8k)
Total 199k
Option B to buy apartment worth (210k plus 3k solicitors fees)-Sell after completion date)
Total 213k
The above properties will be completed in August 2007.
It is our intention to buy the two apartments. The deposit required is 10% of the apartment values (€398,000), which we are in the process of raising. We have contacted a mortgage broker who stated that
“ There was no problem in securing the mortgages at 85% of the initial values. That he can’t secure the mortgages until six months prior to the completion date. Having checked this with other brokers 75%-80% seems to be the lending rate for property abroad. We have already paid €1500 for security for each apartment, which is non-refundable. The average salary of the six people involved is €35000. We hoping to sell Option B outright after completion, renting Option A to pay for the mortgage.
Our thoughts are as follows:
1. Can we trust the mortgage advisor?
2. If do go ahead and trust him and he cant raise the mortgages we will lose the 40k.
3. He can raise the mortgages but only can secure 75% of the initial values and we have to come up with the shortfall of 15% in August 2007and the balance for fees and furnishing.
4. Will he overvalue the properties so we get the mortgages at 75% and we don’t have to raise any more finance?
5. Scrap the idea of buying the two apartments and just buy Option A.
6. Scrap the whole idea and concentrate on the Irish Market and lose € 3,000.
Any thoughts or suggestions would be really appreciated.
Option A to buy apartment worth (188k plus 3k solicitors fees and furnishing 8k)
Total 199k
Option B to buy apartment worth (210k plus 3k solicitors fees)-Sell after completion date)
Total 213k
The above properties will be completed in August 2007.
It is our intention to buy the two apartments. The deposit required is 10% of the apartment values (€398,000), which we are in the process of raising. We have contacted a mortgage broker who stated that
“ There was no problem in securing the mortgages at 85% of the initial values. That he can’t secure the mortgages until six months prior to the completion date. Having checked this with other brokers 75%-80% seems to be the lending rate for property abroad. We have already paid €1500 for security for each apartment, which is non-refundable. The average salary of the six people involved is €35000. We hoping to sell Option B outright after completion, renting Option A to pay for the mortgage.
Our thoughts are as follows:
1. Can we trust the mortgage advisor?
2. If do go ahead and trust him and he cant raise the mortgages we will lose the 40k.
3. He can raise the mortgages but only can secure 75% of the initial values and we have to come up with the shortfall of 15% in August 2007and the balance for fees and furnishing.
4. Will he overvalue the properties so we get the mortgages at 75% and we don’t have to raise any more finance?
5. Scrap the idea of buying the two apartments and just buy Option A.
6. Scrap the whole idea and concentrate on the Irish Market and lose € 3,000.
Any thoughts or suggestions would be really appreciated.