Short term secured loan to trade up

I am considering moving house, i.e. selling and buying. No mortgage at the moment, and none planned long-term.

I am expecting to be able to fund it through an investment disposal and / or bonus payment. However neither of these are guaranteed in the timescale needed.

Hence, I am looking at options for a short-term (2-3 year) loan secured against a book of investment property.

E.g.
Selling a house for 600k
Buying a house for 900k
Need 350k

Expecting to get the 350k from a share sale and / or a bonus payment, that has a small chance of not materialising in the required timeframe.

So want to have a "backstop" option of borrowing the 350k against an investment property portfolio worth 900k that is currently generating 60k per annum in rent, with a view to clearing the loan in 2-5 years (likely 2).

I've looked at Dilosk, Finance Ireland, etc... but I'm not really familiar with these sort of transactions. Anyone any recommendations?

kalooki said:

So want to have a "backstop" option of borrowing the 350k against an investment property portfolio worth 900k that is currently generating 60k per annum in rent, with a view to clearing the loan in 2-5 years (likely 2).

Click to expand...

I doubt that a lender will lend against "an investment property portfolio" whatever about maybe offering a loan secured on a specific property. Have you tried this? Or, more simply, a mortgage on the new PPR. Whether or not these options are realistic probably depends on your overall financial situation, in particular your existing indebtedness and your income.

Sorry should have clarified. No debt at all, personal or otherwise.

Yes, I've considered a loan secured on a specific property, but it would have to be >1 as the portfolio is (essentially) 3 x 300k properties.
I have also considered a PPR mortgage, but this is not suitable.

kalooki said:

I have also considered a PPR mortgage, but this is not suitable.

Click to expand...

I don't understand. Why not? It would seem like the obvious option in these circumstances.

Alternatively sell one of the investment properties and take a small mortgage of c. €50K secured on the PPR and pay it off over the 2-5 years if necessary?

A few points.

You say a mortgage on your home is not suitable. Is that because of the 20 year nature of mortgages? If you can get a mortgage, get one and pay it off over whatever time frame you require. If you go down this route, get a cash back mortgage with a short term fixed rate.

Have you a specific property in mind to buy for €900k? Is your own home sale agreed so you have the €600k.

You probably need to be clearer about the actual facts of the case so that we are not all guessing.

Hello,

I think you'll struggle to get the funding, unless you look at a non Bank lender. Even then, few will want to advance to a non-corporate borrower, they'll want the properties ring fenced within a limited company.

If a traditional Homeloan isn't an option, then you've probably also found that Banks aren't interested in essentially providing an equity release on your property portfolio.

Dilosk may be an option for you, I'm not sure, though.

Thanks for all the input.

Traditional PPR mortgage is off the table at the moment.

The facts are more or less as presented. House sale S/A at 600k, house purchase S/A at 900k, likely to be able to fund the difference through other means, but just in case the timing doesn't work out, looking for a fallback option, i.e. will have the 300k cash within 2 years (likely 1) but just in case I don't have it by closing, looking to leverage other assets to get access to the credit. Another option I've considered is a friends / family loan, but want to maximise the options. I've also considered a commercial line of credit / directors loan from my biz.

@Brendan I'm not posting seeking all my available options, or a recommendation on which is better / worse for me. I'm mostly aware of my options and am considering those separately. The one blind spot I have is whether there is a vehicle for short term lending against secured property assets, hence my post here.

@MrEarl already reached out to Dilosk and two others (as per OP).

kalooki said:

Traditional PPR mortgage is off the table at the moment.

Click to expand...

Why?

Short version: nature of employment doesn't lend itself to at rapid PPR mortgage approval process.

Even with €60K rental income? (Plus other income?).
Why do you think that a non-PPR loan is going to be any quicker? I wouldn't be surprised if it was even slower and involve even more due diligence on the part of the lender.

Have you a house in mind?
Have you gone sale agreed?
Have you signed the contract - presumably not if you haven't the cash sorted out.

If you have friends or family who can lend you the money, that would be by far the best option. I am guessing that if any lender were prepared to lend you the money there would be initial costs and legal fees and a lot of paperwork, whereas a family member would just say "There you are..."

Why not seek a E350k equity release on the 3 investment properties (39% ltv) on a 20 year repayment basis - net (after tax) income from properties sufficient to repay mortgage on this basis - borrow on a variable rate basis - then when share sale/bonus come through in say 2/3 years time just clear the mortgage in full from those sources.

I am assuming that current rental income is fully available for debt repayment and not required for day to day living expenses (if the latter is the case, then the above wouldn't be an option)...

@Bank Manager While I see where you are trying to go with this, I do not see any of the three Banks essentially giving an equity release on a RIP portfolio, for use towards the purchase of a PDH. Do you, and if so, which Bank, please?

@MrEarl I think any of the 3 would look at the OP's proposition...