Investment needed/advice 21 November 2022 at 9:58AM in Savings & investments 21 replies 1.4K views

Dazza23

I work full time for the Royal Mail but want to start a buy to let property portfolio. I have a very good verified contact in the BMV property sector so any property purchase would create immediate equity. I am looking for a loan of £60k which I will pay back as a lump sum in 1 year with 25% interest (£75k in total). I have a healthy share portfolio with Hargreaves Lansdown but don’t want to touch this yet as it is going up very quickly (and I can use as collateral).
 I have tried for a Lombard loan against my share portfolio but they state that the shares have to be worth a minimum of £500k.
Any advice greatly appreciated on the best way to acquire the loan?

dunstonh

One assumes you are using the limited company structure for this?
You will need to seed your deposit to the limited company but after that it will be buy to let mortgages.

InvesterJones

You're actively looking for a loan with 25% interest? Why not look for a loan with smaller interest? Buy to let mortgages are around 5% at the moment I think.

Albermarle

I have a healthy share portfolio with Hargreaves Lansdown but don’t want to touch this yet as it is going up very quickly

Nearly all investment portfolios are down this year, so if yours is going up very quickly, then clearly this is the area to concentrate your skills on, rather than property?

bostonerimus

Dazza23 said:

I work full time for the Royal Mail but want to start a buy to let property portfolio. I have a very good verified contact in the BMV property sector so any property purchase would create immediate equity. I am looking for a loan of £60k which I will pay back as a lump sum in 1 year with 25% interest (£75k in total). I have a healthy share portfolio with Hargreaves Lansdown but don’t want to touch this yet as it is going up very quickly (and I can use as collateral).
 I have tried for a Lombard loan against my share portfolio but they state that the shares have to be worth a minimum of £500k.
Any advice greatly appreciated on the best way to acquire the loan?

Borrowing at 25% to get into the currently volatile property market on some BMV hype/hope is not a financial move I would make. I bought my buy to let with a traditional mortgage and paid it off with my main residence over 15 years. If your share portfolio is up in these very difficult times that might be a better place to put your money.

My advice about the loan is - don't do it! Stop leveraging in a chase for returns and go slow and steady. If you want to get into property start out slowly; save for a deposit, buy a rental with a mortgage and vitally make sure you understand the numbers and factor in a potential 20% loss in value over the next year - would you still want to be in property then?

jimjames

Dazza23 said:

 I have a very good verified contact in the BMV property sector so any property purchase would create immediate equity.

This rings alarm bells to me. It wasn't someone you found via a property education provider was it? How have you verified them? Generally anyone claiming to sell property below market value is creaming off their commission and many so called deals I've seen really don't stack up if you check them out. In the current market what would happen if the drop in property prices wiped out any alleged discount and your property was then worth less than you paid? It seems a very high risk strategy to embark on as we head into recession. 

Exodi

It's almost like you're from a parallel universe to everyone else -

Dazza23 said:

I work full time for the Royal Mail but want to start a buy to let property portfolio.

At a time where a lot of people are anticipating property prices to go down (due to significantly decreased affordability) and increasing renters rights (which by it's nature is to the detriment of landlords) is at the forefront of future legislation.

Dazza23 said:
I am looking for a loan of £60k which I will pay back as a lump sum in 1 year with 25% interest (£75k in total)

25% interest rate? Unless you're planning on taking a payday loan for the £60k, why do you expect the interest rate to be so incredibly high?

Dazza23 said:
I have a healthy share portfolio with Hargreaves Lansdown but don’t want to touch this yet as it is going up very quickly 

Your portfolio is going up very quickly? Most national economies are in meltdown, with many investors nursing double digit losses this year. Unless your whole portfolio is in energy companies or pot luck stock picks, I'd be amazed if you were experiencing growth.

Especially at the level that it would make more sense to take out a 25% interest loan, over cashing them in.

Dazza23 said:
I have tried for a Lombard loan against my share portfolio but they state that the shares have to be worth a minimum of £500k.

I was under the impression you could get Lombard loans with £100k of investments, but I've admittedly never taken one out.

Dazza23

Many thanks for all the helpful advice and replies, much appreciated. I will take everything on board. I want to keep my shares at this moment in time as the company I have them with (PREM) have recently received significant investment from a Chinese company (Suzhou). The future projections are very very good. Up over 80% in the last few months.

bostonerimus

Maybe take some time to learn about investment risk.

Albermarle

You will never get anybody to lend money against a single share portfolio, especially one in such a high risk area.

NoviceInvestor1

Is this not just an attempt to "pump" the Premier African Minerals share price? 

The post is too bizarre for it to be anything else.