The major problem facing BMV property investors today is no longer the finance but the quality of the leads along with increased competition in the BMV investor market. The more popular BMV purchase becomes with investors the harder it has become to get those big discounts and large cash backs to stack up.
BMV is not exactly rocket science and the problem today is to know which lead providers you can trust and which you should stay away from.
This article is designed to help inform BMV property investors on the various lead sources available to them. If you haven’t already done so, I recommend you read my articles on BMV Property & BMV Mortgages which will give you a good insight into the workings of this relatively new phenomenon.
Estate Agents
By far the most effective way to source local leads are through estate agents but don’t expect to pick up BMV deals from the shop window. If you have contacts within the estate agents you can achieve some great results from this lead source.
Remember most estate agents will already either be buying BMV property themselves or have investors lined up and waiting for properties. The only way to make this work is through incentives for the agents, if they know that a good lead and quick completion will earn them £500 - £1,000 as a finder's fee then you’re likely to get better deals than just asking for anything that they can't sell.
Either go direct to the managements of independent estate agents or negotiate deals direct with the agents of larger agencies.
Positives
• You have professional agents who are in the local area every day dealing with potential sellers.
• Long term relationships can be achieved with constant steam of leads to service.
• Agent can help flip properties for instant profit or negotiate on your behalf.
Negatives
• Most agents will already have a database of willing investors requiring less than 15% discount.
• Many agents will require larger finder’s fees due to the constant supply of investors.
• You need to achieve a high conversion rate to keep the agents happy and willing to continue sourcing BMV deals on your behalf.
Repossession Leads
Not an easy job but its here you can negotiate deals of 30% or more BMV. It involves long hours, street walking, spending time with people who are often in sad circumstances and then negotiating the lowest possible price before the property is taken into repossession.
This is not a route for first time investors and is often difficult for experienced investors to work successfully although if done right the rewards are often worth all the effort.
The process involves obtaining lists of homeowners due to attend court regarding repossession of their property and carefully targeting these homeowners with information about your services. Many investors will target the local area and hand post notes through the door stating they are looking for property to buy in the area.
The number one rule is not to personalise the letters as this will often scare the homeowners on how somebody else could know their personal business.
Buying BMV property through this process will usually take from 2 – 6 weeks to convert and you have to deal with a lot of time wasters along with homeowners agreeing when it’s already too late. You need to be a fantastic people person and show your empathy with people's situations, you could spend hours with someone only to leave with nothing other than a sad story.
Positives
• If successful you can achieve discounts in excess of 25%.
• You can target your local area.
• Opportunity to help distressed sellers avoid repossession.
Negatives
• Can be extremely time consuming with a lot of hassle from homeowners along with time wasters who are inevitably going to have their home repossessed.
• Many of the home owners have high LTV mortgages which often make the deal impossible for the seller, lender and buyer to agree on.
• Difficult to manage outside your local area as the best results are often achieved with hand delivers notes and home visits.
Unqualified leads
These leads come from a range of different sources and will generally include the homeowners full contact details, mortgage amount, property value, reason for sale and agreement to sell at a discount.
This is currently the most popular form of lead purchase which generally come from homeowners searching online for companies who will purchase property quickly. They will complete an online form and these details will them be sold on the open market.
My warning on these leads would be to find out if the lead generators buy BMV property themselves and if so why are they selling them?
Another thing to remember is that these leads are generally sold for £75 - £250 each which requires an amount of confidence on your part to know the leads are of good quality and will have a high conversion rate. The major problem with these leads involve the homeowners themselves, they will often submit their details to a number of websites, resulting in homeowners playing the buyers against each other for the highest offer.
Getting anything more than 15% - 20% BMV is extremely difficult unless you’re a strong negotiator. Remember that after winning the bidding war the seller could still pull out of the deal at any moment whilst their still contacting every possible buyer under the sun.
Positives
• Lower price for leads compared with ready made deals.
• Contain most of the information required to assess profitability.
• Often room for cash back.
• Some providers have lead replacement policies.
Negatives
• Extremely competitive market with buyers competing with unknown number of other bidders.
• Risk of sellers being time wasters and only interested in what they “could” get for their home.
• Hidden fees often attached such as sourcing fees often up to 2%.
• Number of lead providers will sell the same lead to multiple buyers.
• Leads are often ones which the lead providers are not interested in themselves.
Ready made deals
This is the armchair investors dream, go online, find a ready made deal, accept the terms and the BMV property, finance, lead, and legal fees are taken care of for you. They are packaged as one price with rental and valuation calculations already completed and then sold as packages generally in the region of £500 per lead.
Positives:
•Deals are ready made, no need to negotiate prices, work out rental & valuations or often arrange the finance.
•Great for first time buyers with little knowledge of BMV market required.
Negatives:
• Deals often carry hefty fees with £500 for the package, 2% set up fee and broker fees added on top.
• Cash back is often little if any and some deals require capital investment.
• Rental calculations are often 100% of the mortgage which could spell trouble if tenants don’t pay.
In conclusion I urge any BMV property investors to research their lead provider thoroughly before committing yourself and your money by getting answers to the following questions;
• What are the true costs including all the fees?
• What experience does the lead provider have?
• Where do the leads come from?
• Does the lead provider also invest in BMV property and if so why are they selling the leads?
If the lead provider requires you to use its solicitor, broker and agents be very cautious as there are a number of rogue traders out there searching for people new to BMV investment to prey on.
Get a good BMV mortgage broker who understands the BMV market and who can assess possible deals and give you guidance on its merit.
Don’t hunt for the cheapest lead prices; they are often the ones that no one else wants.
Join specialist BMV property forums and lead exchanges before beginning your venture into BMV as they are often filled with peoples experiences and advice.
Personally I use the following websites but remember that what’s right for one may not be right for another.
singingsig.co.uk
bmvpropertyleads.co.uk
leadsexchange.co.uk
discountpropertyauction.co.uk
I hope you found this article useful and I’m more than happy to talk to anyone new to BMV property along with experienced investors. I am a specialist BMV mortgage broker and property investor with a wealth of knowledge & experience of the market.
Written by,
Daniel Morgan
Buy to Let Mortgage Broker & Property Investor
Showing posts with label mortgage broker. Show all posts
Showing posts with label mortgage broker. Show all posts
Saturday, 2 February 2008
Saturday, 19 January 2008
BMV property mortgages & leads
With the current housing market as it is below market value or BMV property is starting to make big gains in the amount of business I and other mortgage brokers arrange for their clients. My previous article on what is bmv property? explains how the system works and how buyers can benefit from falling house prices.
I receive a number of emails every day seeking advice on BMV property finance and even more on BMV property leads. For BMV purchases to work you need to consider a number of factors to ensure you can get a great deal and secure BMV mortgages.
Open Market Value
Many BMV websites in the UK will quote the open market value, OMV, as being substantially higher than the true amount, often because the cheaper lead suppliers allow the seller to guess what their house is worth. How many people who know they are going to give a discount off their property will give a true reflection? How many people would undervalue an asset which they may have spent over 10 years building and investing in?
I often find the true OMV is only really known often the surveyor has assessed the property, usually after spending over £300 on a non refundable survey report.
You need to do your research, HomeTrack is one useful tool along with RightMove and local agents. Use all of these resources before deciding to pay the mortgage valuation.
Rental assessment & mortgage available
This is the one major sticking point when we try to stack up if a property in worth buying or not. The only real mortgage lender currently offering same day remortgages is Mortgage Express which currently require 125% pay rate to offer the mortgage on the property. Time and time again deals which have looked promising fall through due to either investors or agents over calculating the rental return. To work out how much rent you need to borrow a fixed amount or visa versa there is a helpful formula below based on a Mortgage Express mortgage of £100,000 with an interest rate of 5.39% which is currently accurate and a property which can rent for £575 per month.
What rental would you need
Take the amount of the loan: £100,000
Multiply by the lenders interest rate: 5.39% (100,000 * 0.0539)
Divide by 12 which gives monthly: 100000 * 0.0539 = £5,390 / 12 = £450
Multiply this by the pay rate (125%): 550 * 1.25 = £560
This amount is how much rental you would need to achieve to be offered the £100,000 mortgage.
How much can I borrow based on rental
Take the monthly rental: £575
Divide this by pay rate (125%) : 575 / 1.25 = £460
Calculate annual amount: 460 * 12 = £5,520
Divide by interest rate: 5,520 / 0.0539 = £102,411
This example shows you could borrow up to £102,411 or 85% of the OMV, whichever is lower.
Speak with local letting agents to get an idea of how much you will rent the property out for and even see if its possible to have the letting agent asses the property your interested in. They will often offer to do so at no cost due to potential future business.
Negotiating Property Discount
Some BMV lead providers will negotiate the purchase price for you and others will simply supply the lead details and calculate the open market value. For BMV property investors new or inexperienced then make sure the price have been agreed and fixed before hand, you want to make sure you get the biggest discount available which means you need experienced negotiators agreeing a sale price.
For a true no money down or cash back deal you need to be achieving a discount of at least 17.5% off the OMV and still have the rental stack up.
The current mortgage lenders will offer up to 85% of the OMV on same day re-mortgages with broker, bridging loan and legal fees generally around 2.5% of the purchase price this would mean an agreed discount of 17.5% would mean a true no money down deal minus the valuation costs. Any discount above this and your looking at the possibility of cash back which is why many BMV property investors look for deals which are discounted over 20%.
Sourcing BMV property leads
This, by far, is the most common question asked when looking at BMV property. For true no money down or cash back deals you have to be proactive in sourcing leads. Calling a broker or lead generator and expecting to sit in you home while people bring you deals with 20% is not realistic. Why would I offer you BMV property leads with 20% discount when I'm also a property investor? I wouldn't and neither would most people involved in BMV, I can offer you 100's on 15% deals but that's not a true no money down deal. My best advice would be get out and be proactive in your area such as leaflet drops, local store adds, auction fall through, etc.
For long term success sign up with a data supplier rather than negotiated lead supplier which is far cheaper along with profitable. If your going to use BMV lead providers find out who they are; Do they invest in BMV property? Where do the leads come from? How do they value the OMV and Rental? What is their returns policy?
I know of two reliable lead providers which are bmvpropertyleads.co.uk and discountpropertyauction.co.uk both offer different services by I have spoken or met the owners and can say their business is selling property or leads, not buying and selling the weak ones.
Other financing methods
There is another option to buying and financing BMV property which is through an assignable contract using a third party. It's rather more complex than same day re-mortgages so I wont go into too much detail but you can contact me is you would like to find out more.
A third party will buy the BMV property at discount and sell to the investor at OMV with an assignable contact giving the client for example an upfront rental guarantee of the discounted amount which is paid after completion.
This allows the investor to purchase the property with any buy to let mortgage as its no longer a re-mortgage its a purchase. This type of structure is getting more popular due to the lack of buy to let mortgage lenders offering same day re-mortgages without high fees or rental requirements.
I hope this article on BMV finance and property purchase has helped you gain a better understanding of how it works and what factors you need to consider before deciding on a property, broker or lead provider.
BMV Mortgage Brokers
There's a never ending supply of stories regarding deals gone wrong due to the mortgage broker not truly understanding how BMV finance works. A client will call them and explain what their planning to do and the broker, never one to turn down business, offers their services. BMV mortgage brokers tend to charge higher fees than normal brokers, me included, due to the contacts and experience they have in getting mortgages through and deals completed. People will often shop around for the cheapest broker but "buyer beware" if they are charging NO BROKER FEES as one of two things are generally the case;
(i) They are relaying on the mortgage lenders commission only making them volume brokers, try getting hold of these people when things go wrong. They operate by moving to the next deal as quickly as possible leaving any issues behind. They don't have the time to talk deals through.
(ii) They make their money else wear via bridging lenders or conveyancing. Its the same as a broker fee except wrapped up differently. If they hide how their paid what else are they hiding?
There are hundreds of good brokers and a useful place to start is by looking on the SingingPig forums. Just remember that like most things in life you get what you pay for. Question how their paid, what experience do they have and are they BMV investors themselves, if you don't feel you can build a long term relationship then move on. A good broker can help you succeed in your BMV property investments, its in their interests that you do well!
Here's the sales bit ;)
I'm a BMV mortgage broker and investor myself so if you have any questions or would like to find an experienced BMV broker then give me a call and we can discuss your finance and property needs.
I charge a 1% broker fee and can offer packages where the total costs add up to 2.5% of the purchase price. After the first deal my broker fee is negotiable due to most of the work such as applications, ID, sharing of my knowledge & experience, etc happening during the first deal. My standard fee is 0.5% - 0.75% of the purchase price. I feel this is honest, upfront and fair for my experience and contacts in the BMV market.
Written by Daniel Morgan
Mortgage Broker & Finance Writer
I receive a number of emails every day seeking advice on BMV property finance and even more on BMV property leads. For BMV purchases to work you need to consider a number of factors to ensure you can get a great deal and secure BMV mortgages.
Open Market Value
Many BMV websites in the UK will quote the open market value, OMV, as being substantially higher than the true amount, often because the cheaper lead suppliers allow the seller to guess what their house is worth. How many people who know they are going to give a discount off their property will give a true reflection? How many people would undervalue an asset which they may have spent over 10 years building and investing in?
I often find the true OMV is only really known often the surveyor has assessed the property, usually after spending over £300 on a non refundable survey report.
You need to do your research, HomeTrack is one useful tool along with RightMove and local agents. Use all of these resources before deciding to pay the mortgage valuation.
Rental assessment & mortgage available
This is the one major sticking point when we try to stack up if a property in worth buying or not. The only real mortgage lender currently offering same day remortgages is Mortgage Express which currently require 125% pay rate to offer the mortgage on the property. Time and time again deals which have looked promising fall through due to either investors or agents over calculating the rental return. To work out how much rent you need to borrow a fixed amount or visa versa there is a helpful formula below based on a Mortgage Express mortgage of £100,000 with an interest rate of 5.39% which is currently accurate and a property which can rent for £575 per month.
What rental would you need
Take the amount of the loan: £100,000
Multiply by the lenders interest rate: 5.39% (100,000 * 0.0539)
Divide by 12 which gives monthly: 100000 * 0.0539 = £5,390 / 12 = £450
Multiply this by the pay rate (125%): 550 * 1.25 = £560
This amount is how much rental you would need to achieve to be offered the £100,000 mortgage.
How much can I borrow based on rental
Take the monthly rental: £575
Divide this by pay rate (125%) : 575 / 1.25 = £460
Calculate annual amount: 460 * 12 = £5,520
Divide by interest rate: 5,520 / 0.0539 = £102,411
This example shows you could borrow up to £102,411 or 85% of the OMV, whichever is lower.
Speak with local letting agents to get an idea of how much you will rent the property out for and even see if its possible to have the letting agent asses the property your interested in. They will often offer to do so at no cost due to potential future business.
Negotiating Property Discount
Some BMV lead providers will negotiate the purchase price for you and others will simply supply the lead details and calculate the open market value. For BMV property investors new or inexperienced then make sure the price have been agreed and fixed before hand, you want to make sure you get the biggest discount available which means you need experienced negotiators agreeing a sale price.
For a true no money down or cash back deal you need to be achieving a discount of at least 17.5% off the OMV and still have the rental stack up.
The current mortgage lenders will offer up to 85% of the OMV on same day re-mortgages with broker, bridging loan and legal fees generally around 2.5% of the purchase price this would mean an agreed discount of 17.5% would mean a true no money down deal minus the valuation costs. Any discount above this and your looking at the possibility of cash back which is why many BMV property investors look for deals which are discounted over 20%.
Sourcing BMV property leads
This, by far, is the most common question asked when looking at BMV property. For true no money down or cash back deals you have to be proactive in sourcing leads. Calling a broker or lead generator and expecting to sit in you home while people bring you deals with 20% is not realistic. Why would I offer you BMV property leads with 20% discount when I'm also a property investor? I wouldn't and neither would most people involved in BMV, I can offer you 100's on 15% deals but that's not a true no money down deal. My best advice would be get out and be proactive in your area such as leaflet drops, local store adds, auction fall through, etc.
For long term success sign up with a data supplier rather than negotiated lead supplier which is far cheaper along with profitable. If your going to use BMV lead providers find out who they are; Do they invest in BMV property? Where do the leads come from? How do they value the OMV and Rental? What is their returns policy?
I know of two reliable lead providers which are bmvpropertyleads.co.uk and discountpropertyauction.co.uk both offer different services by I have spoken or met the owners and can say their business is selling property or leads, not buying and selling the weak ones.
Other financing methods
There is another option to buying and financing BMV property which is through an assignable contract using a third party. It's rather more complex than same day re-mortgages so I wont go into too much detail but you can contact me is you would like to find out more.
A third party will buy the BMV property at discount and sell to the investor at OMV with an assignable contact giving the client for example an upfront rental guarantee of the discounted amount which is paid after completion.
This allows the investor to purchase the property with any buy to let mortgage as its no longer a re-mortgage its a purchase. This type of structure is getting more popular due to the lack of buy to let mortgage lenders offering same day re-mortgages without high fees or rental requirements.
I hope this article on BMV finance and property purchase has helped you gain a better understanding of how it works and what factors you need to consider before deciding on a property, broker or lead provider.
BMV Mortgage Brokers
There's a never ending supply of stories regarding deals gone wrong due to the mortgage broker not truly understanding how BMV finance works. A client will call them and explain what their planning to do and the broker, never one to turn down business, offers their services. BMV mortgage brokers tend to charge higher fees than normal brokers, me included, due to the contacts and experience they have in getting mortgages through and deals completed. People will often shop around for the cheapest broker but "buyer beware" if they are charging NO BROKER FEES as one of two things are generally the case;
(i) They are relaying on the mortgage lenders commission only making them volume brokers, try getting hold of these people when things go wrong. They operate by moving to the next deal as quickly as possible leaving any issues behind. They don't have the time to talk deals through.
(ii) They make their money else wear via bridging lenders or conveyancing. Its the same as a broker fee except wrapped up differently. If they hide how their paid what else are they hiding?
There are hundreds of good brokers and a useful place to start is by looking on the SingingPig forums. Just remember that like most things in life you get what you pay for. Question how their paid, what experience do they have and are they BMV investors themselves, if you don't feel you can build a long term relationship then move on. A good broker can help you succeed in your BMV property investments, its in their interests that you do well!
Here's the sales bit ;)
I'm a BMV mortgage broker and investor myself so if you have any questions or would like to find an experienced BMV broker then give me a call and we can discuss your finance and property needs.
I charge a 1% broker fee and can offer packages where the total costs add up to 2.5% of the purchase price. After the first deal my broker fee is negotiable due to most of the work such as applications, ID, sharing of my knowledge & experience, etc happening during the first deal. My standard fee is 0.5% - 0.75% of the purchase price. I feel this is honest, upfront and fair for my experience and contacts in the BMV market.
Written by Daniel Morgan
Mortgage Broker & Finance Writer
Sunday, 6 January 2008
Buying property below market value (BMV)
There have been countless reports over the previous months, from me included, that the UK's property market is heading for a significant market adjustment with property prices expected to fall over the coming months. Whilst this, if correct, will be bad news for homeowners looking to sell their home it may have a silver lining.
If you’re looking to invest into below market value (BMV) properties you may have a prosperous new year ahead.
What are BMV properties and how can you benefit?
BMV properties are homes which are being sold for below the current market value, hence the purchaser could benefit from equity and long term rental income along
Why would someone sell their home BMV?
There could be a number of reasons ranging from the sellers being unable to maintain their current mortgage payments. Although the seller will receive less than the current market values the property many will have sufficient equity in the property to still make a profit. The seller may also need to sell fast due to job or family relocation in a different part of the country or different country altogether. Bereavement of the homeowner will often result in family members requiring selling the property quickly to settle the deceased person’s estate and payout the fund to beneficiaries.
How can this be financed?
There are two main options depending on your investment goals;
(i) Place a 10% – 15% deposit on the property and take out a Buy to Let mortgage or even a residential mortgage and move in yourself.
(ii) Buy the property with a one day closed bridging loan and remortgage immediately, this will often allow you to purchase the property without a deposit in place.
How do one day closed bridging loans work?
The theory is simple; if you purchase a property for the first time you can get around 85% of the purchase price or market value, most importantly, whichever is lower. If however you’re re-mortgaging your property you can get 85% of the current market value. The one day closed bridging loan works by purchasing the property first, then you re-mortgage the purchase with a buy to let mortgage thus releasing the discount you have received off the purchase price.
How much does it cost?
Generally you are looking at around 2% of the property purchase price when you take into account the bridging loan, mortgage, legal & broker fees. You may also need to pay for BMV leads from property sourcing companies if you can’t or don’t want to find your own.
What are the drawbacks to this financing method?
(i) It is ever more difficult to find properties which are over 15% BMV
(ii) The rental calculation can be difficult to stack up
(iii) There are very few lenders willing to fund this sort of purchase
However with 2008 expected to be a difficult year for the property and mortgage market don’t be surprised if you start hearing more about this type of investment in the national media.
Written by Daniel Morgan
Mortgage Broker & Property Expert
If you’re looking to invest into below market value (BMV) properties you may have a prosperous new year ahead.
What are BMV properties and how can you benefit?
BMV properties are homes which are being sold for below the current market value, hence the purchaser could benefit from equity and long term rental income along
Why would someone sell their home BMV?
There could be a number of reasons ranging from the sellers being unable to maintain their current mortgage payments. Although the seller will receive less than the current market values the property many will have sufficient equity in the property to still make a profit. The seller may also need to sell fast due to job or family relocation in a different part of the country or different country altogether. Bereavement of the homeowner will often result in family members requiring selling the property quickly to settle the deceased person’s estate and payout the fund to beneficiaries.
How can this be financed?
There are two main options depending on your investment goals;
(i) Place a 10% – 15% deposit on the property and take out a Buy to Let mortgage or even a residential mortgage and move in yourself.
(ii) Buy the property with a one day closed bridging loan and remortgage immediately, this will often allow you to purchase the property without a deposit in place.
How do one day closed bridging loans work?
The theory is simple; if you purchase a property for the first time you can get around 85% of the purchase price or market value, most importantly, whichever is lower. If however you’re re-mortgaging your property you can get 85% of the current market value. The one day closed bridging loan works by purchasing the property first, then you re-mortgage the purchase with a buy to let mortgage thus releasing the discount you have received off the purchase price.
How much does it cost?
Generally you are looking at around 2% of the property purchase price when you take into account the bridging loan, mortgage, legal & broker fees. You may also need to pay for BMV leads from property sourcing companies if you can’t or don’t want to find your own.
What are the drawbacks to this financing method?
(i) It is ever more difficult to find properties which are over 15% BMV
(ii) The rental calculation can be difficult to stack up
(iii) There are very few lenders willing to fund this sort of purchase
However with 2008 expected to be a difficult year for the property and mortgage market don’t be surprised if you start hearing more about this type of investment in the national media.
Written by Daniel Morgan
Mortgage Broker & Property Expert
Saturday, 29 December 2007
Mortgage and property market in 2008
There is growing concern coming from experts on how the mortgage and property market in 2008 will turn out.
Although not guaranteed house priced are likely to fall in early 2008 by at least 1-2% as first time buyers are unable to enter the market and second time movers are unable to sell their home. There was incredible housing inflation from early 2006 to mid 2007 of up to 100% in some areas such as the North of England and East Wales.
Thankfully, for long term stability, these unsustainable increases have come to an end, this will hopefully lessen the extent to which the UK's slowing economy will be effected in the long term.
Predictions are that house prices will fall flat over the next year with the possibility of another interest rate cut ensuring UK home owners don't face negative equity there are some positive signs that this market correction will ensure stable growth over the next 10 years.
The possible changes in the mortgage market are more people looking at remaining in their current properties for longer which should see an increase in long fixed rate mortgages, a product being purchased by the current government as a way to stabilise the mortgage market.
Long term mortgages are generally fixed for between 5 years to 25 years which could give added security to homeowners fearful of fluctuating interest rates and house prices. The obvious negative being as the products hints, you are fixed for that period. There are several 25 year products which will only penalise you for the first 5 to 10 years, which is still a considerable amount of time, with the other disadvantage being many independent mortgage brokers may see the recommendation of long term fixed rate mortgages as commercial suicide to the lose of custom many are used to.
If you are considering a long term fixed rate mortgage please remember to fully understand the consequences of tying yourself to one lender for such a period. They can be a good choice for some homeowners but without thinking all doom and gloom, what happens if you need to move for family, work or other social reasons?
Many will offer a porting facility, a feature which allows you to take the mortgage to the next home, however what if your new property in overseas or has a lower value?
For more information on long term mortgages you should seek an independent mortgage broker from my mortgage portal site.
Although not guaranteed house priced are likely to fall in early 2008 by at least 1-2% as first time buyers are unable to enter the market and second time movers are unable to sell their home. There was incredible housing inflation from early 2006 to mid 2007 of up to 100% in some areas such as the North of England and East Wales.
Thankfully, for long term stability, these unsustainable increases have come to an end, this will hopefully lessen the extent to which the UK's slowing economy will be effected in the long term.
Predictions are that house prices will fall flat over the next year with the possibility of another interest rate cut ensuring UK home owners don't face negative equity there are some positive signs that this market correction will ensure stable growth over the next 10 years.
The possible changes in the mortgage market are more people looking at remaining in their current properties for longer which should see an increase in long fixed rate mortgages, a product being purchased by the current government as a way to stabilise the mortgage market.
Long term mortgages are generally fixed for between 5 years to 25 years which could give added security to homeowners fearful of fluctuating interest rates and house prices. The obvious negative being as the products hints, you are fixed for that period. There are several 25 year products which will only penalise you for the first 5 to 10 years, which is still a considerable amount of time, with the other disadvantage being many independent mortgage brokers may see the recommendation of long term fixed rate mortgages as commercial suicide to the lose of custom many are used to.
If you are considering a long term fixed rate mortgage please remember to fully understand the consequences of tying yourself to one lender for such a period. They can be a good choice for some homeowners but without thinking all doom and gloom, what happens if you need to move for family, work or other social reasons?
Many will offer a porting facility, a feature which allows you to take the mortgage to the next home, however what if your new property in overseas or has a lower value?
For more information on long term mortgages you should seek an independent mortgage broker from my mortgage portal site.
Tuesday, 18 December 2007
ECB to offer unlimited funds to banks at fixed rate
The ECB, European Central Bank, today stated it would offer unlimited funds to European banks at a fixed rate in the hope of encouraging banks to start lending to each other again.
What effect does this have on the UK?
It could possibly reduce the LIBOR rate which is currently at an all time high due to the limited supply of lenders willing to lend out their money. Most are keeping hold of their cash due to possible liquidity problems in the future.
If the funds can reduce the LIBOR rate it would make it easier, if not cheaper, for banks such as Norther Rock to borrow money to lend to its customers.
It will not solve the issue of the sub prime market but will ease the consequences the sub prime and adverse lenders have had on the market in general. It is still too early to tell if a reduced libor rate will help or hinder the current situation.
It all now lies with European banks to take up the fixed rate offers and start to lend to each other again.
How does this effect my Mortgage?
Well if you were looking for a fixed rate mortgage a few weeks back with a high LTV, the majority of the lenders were sourcing their finances from the LIBOR market. Now if the LIBOR rates falls due to more money being freely available you could see one of two things happening in the UK mortgage industry;
(i) Mortgage lenders make more profit.
(ii) Mortgage lenders pass on the savings to Mortgage borrowers in reduced interest rates.
With the number of mortgages available on the market I would predict more lenders leaning towards the 2nd option due to increased competition and vigilance from mortgage brokers who give independent advice.
If you use a good Independent Mortgage Broker he should be able to conduct a mortgage search for cheap mortgage with lower interest rates.
Daniel Morgan
FruitMortgages.com
Mortgage Broker Search
What effect does this have on the UK?
It could possibly reduce the LIBOR rate which is currently at an all time high due to the limited supply of lenders willing to lend out their money. Most are keeping hold of their cash due to possible liquidity problems in the future.
If the funds can reduce the LIBOR rate it would make it easier, if not cheaper, for banks such as Norther Rock to borrow money to lend to its customers.
It will not solve the issue of the sub prime market but will ease the consequences the sub prime and adverse lenders have had on the market in general. It is still too early to tell if a reduced libor rate will help or hinder the current situation.
It all now lies with European banks to take up the fixed rate offers and start to lend to each other again.
How does this effect my Mortgage?
Well if you were looking for a fixed rate mortgage a few weeks back with a high LTV, the majority of the lenders were sourcing their finances from the LIBOR market. Now if the LIBOR rates falls due to more money being freely available you could see one of two things happening in the UK mortgage industry;
(i) Mortgage lenders make more profit.
(ii) Mortgage lenders pass on the savings to Mortgage borrowers in reduced interest rates.
With the number of mortgages available on the market I would predict more lenders leaning towards the 2nd option due to increased competition and vigilance from mortgage brokers who give independent advice.
If you use a good Independent Mortgage Broker he should be able to conduct a mortgage search for cheap mortgage with lower interest rates.
Daniel Morgan
FruitMortgages.com
Mortgage Broker Search
Monday, 17 December 2007
Need to re-mortgage your fixed rate mortgage?
Need to re-mortgage your fixed rate mortgage?
Your not the only one, 1000's of homeowners have or will be coming off their fixed rate mortgage this year and early 2008. Many have been on fixed rate mortgages as low as 4.4% and most will be re-mortgaging on a rate over 1% higher in the next few weeks!
Even with the recent interest rate cut by the Bank of England it is thought that homeowners may soon feel the pinch of 4 rate rises whilst they were safe in a fixed rate mortgage.
It doesn't have to be doom and gloom though!
There are several ways in which you could remortgage on a cheap mortgage with similar monthly payments that you've had before.
High Arrangement Fee & Low Interest Rate
This maybe an option if you have a small mortgage and will benefit from the lower interest rates, although the higher arrangement fee may not justify the low interest rate unless its for a long period.
Fee Valuation & Free Legals
Many mortgage lenders now offer free valuations and free legals for people remortgaging, helping reduce the overall cost compared with paying upfront.
Offset Mortgage/Flexible Mortgage
These tend to allow the borrower to over pay their mortgage or offset savings against the mortgage balance. This can significantly reduce the monthly payments or reduce the term of the mortgage. It also gives the flexibility to withdraw money if required.
The one thing to remember is to seek an independent mortgage brokers advice on the best and cheapest mortgage option for you. Most importantly if your coming off your fixed rate mortgage, seek advice sooner rather than later. If your mortgage changes to a Standard Variable Rate before you arrange your re-mortgage you will see a steep increase in your monthly payments.
Don't give the lender a penny more than you need too!
For more information on the 1,000's of different mortgages on the market and to find a local independent mortgage brokers near you then please visit my website FruitMortgages.com
Your not the only one, 1000's of homeowners have or will be coming off their fixed rate mortgage this year and early 2008. Many have been on fixed rate mortgages as low as 4.4% and most will be re-mortgaging on a rate over 1% higher in the next few weeks!
Even with the recent interest rate cut by the Bank of England it is thought that homeowners may soon feel the pinch of 4 rate rises whilst they were safe in a fixed rate mortgage.
It doesn't have to be doom and gloom though!
There are several ways in which you could remortgage on a cheap mortgage with similar monthly payments that you've had before.
High Arrangement Fee & Low Interest Rate
This maybe an option if you have a small mortgage and will benefit from the lower interest rates, although the higher arrangement fee may not justify the low interest rate unless its for a long period.
Fee Valuation & Free Legals
Many mortgage lenders now offer free valuations and free legals for people remortgaging, helping reduce the overall cost compared with paying upfront.
Offset Mortgage/Flexible Mortgage
These tend to allow the borrower to over pay their mortgage or offset savings against the mortgage balance. This can significantly reduce the monthly payments or reduce the term of the mortgage. It also gives the flexibility to withdraw money if required.
The one thing to remember is to seek an independent mortgage brokers advice on the best and cheapest mortgage option for you. Most importantly if your coming off your fixed rate mortgage, seek advice sooner rather than later. If your mortgage changes to a Standard Variable Rate before you arrange your re-mortgage you will see a steep increase in your monthly payments.
Don't give the lender a penny more than you need too!
For more information on the 1,000's of different mortgages on the market and to find a local independent mortgage brokers near you then please visit my website FruitMortgages.com
Saturday, 15 December 2007
Discount Purchase Properties
There is a growing trend in recent month, in response to a slow housing market, for investors to demand larger discounts on the open market value (OMV). The way it works is buy purchasing the property at a discount and then having a buy to let mortgage on the OMV thus reducing or even eliminating the need for a deposit.
Example
Open market value of property: £100,000
Purchase price: £85,000
Mortgage: 85% of market value: £85,000
However it is not as simple as purchasing at a discount and then taking out a mortgage to finance the project, you need a one day closed bridging loan to facilitate the purchase and then a buy to let re-mortgage to release the value and equity in the property.
I have been carrying out this type of finance for the last 2 months and have seen a sharp rise in demand from investors for this product.
With expectations of the housing market remaining slow in Jan and Feb we should see this type of finance increase dramatically.
If you are interested in learning more about this type of finance then please feel free to give me a call or email me and I can explain how I can help build you a large property portfolio with little if any money down.
Daniel Morgan
Independent Mortgage Broker
info@fruitmortgages.com
07815161734
Example
Open market value of property: £100,000
Purchase price: £85,000
Mortgage: 85% of market value: £85,000
However it is not as simple as purchasing at a discount and then taking out a mortgage to finance the project, you need a one day closed bridging loan to facilitate the purchase and then a buy to let re-mortgage to release the value and equity in the property.
I have been carrying out this type of finance for the last 2 months and have seen a sharp rise in demand from investors for this product.
With expectations of the housing market remaining slow in Jan and Feb we should see this type of finance increase dramatically.
If you are interested in learning more about this type of finance then please feel free to give me a call or email me and I can explain how I can help build you a large property portfolio with little if any money down.
Daniel Morgan
Independent Mortgage Broker
info@fruitmortgages.com
07815161734
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