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
Saturday, 15 December 2007
Interest rate drop to 5.5%
Interest rates dropped to 5.5% last week which was a welcome from most of the finance industry. Mortgage brokers, Lenders & Borrowers have all been sensitive to the market in the last 6-8 weeks due to a slow down, if not fall, in house prices and a high LIBOR rate which has made it difficult to source money on the open market. Although the LIBOR rate is still high compared to 3 months ago we are all hoping the drop in the Bank of England base rate will encourage Lenders to lower their interbank rate.
The obvious advantage to home owners is that many on a variable, tracker or discount rate will see their monthly payments reduce over the next few weeks. HBOS, owners of HALIFAX, and Nationwide were both the first to announce it had reduced its interest rates on their tracker and variable products.
However hopes of a change in the current housing market would be possibly over optimistic, a 1/4% change in interest rates save or cost around £40 a month on the average home. There is likely to be a re-index in the British housing market before anyone will see an increase in house sales. January and February should be extremely trying times for the UK.
The only market I can foresee growing will be the Bridging Loan and Discount Property Purchases market as they move in to purchase property from Distressed Sellers, people who cannot sell their home on the open market.
Not to be one for doom and gloom: The only thing to fear is fear itself. The market has a funny way of correcting itself and although it is likely house prices may fall in the near futurem, there is no real concern of a return to the 90's.
Enjoy your Christmas,
Daniel Morgan
Independent Mortgage Broker
FruitMortgages.com
The obvious advantage to home owners is that many on a variable, tracker or discount rate will see their monthly payments reduce over the next few weeks. HBOS, owners of HALIFAX, and Nationwide were both the first to announce it had reduced its interest rates on their tracker and variable products.
However hopes of a change in the current housing market would be possibly over optimistic, a 1/4% change in interest rates save or cost around £40 a month on the average home. There is likely to be a re-index in the British housing market before anyone will see an increase in house sales. January and February should be extremely trying times for the UK.
The only market I can foresee growing will be the Bridging Loan and Discount Property Purchases market as they move in to purchase property from Distressed Sellers, people who cannot sell their home on the open market.
Not to be one for doom and gloom: The only thing to fear is fear itself. The market has a funny way of correcting itself and although it is likely house prices may fall in the near futurem, there is no real concern of a return to the 90's.
Enjoy your Christmas,
Daniel Morgan
Independent Mortgage Broker
FruitMortgages.com
Wednesday, 7 November 2007
End of 100% Mortgages?
I'm finding it ever more difficult to source 100% mortgages in the current market.
Where as 5 years ago most first time buyers had a deposit of 5% or more, in today's sky high property prices clients are struggling to come up with the deposit.
100% mortgages, a relatively new, mortgage product in the UK were aimed at solving this problem. They would often allow first time buyers the ability to purchase a property without the need of saving for a deposit. They are even mortgages offering 125% of the loan amount.
Unfortunately with the current credit crunch effecting the LIBOR mortgage rate and banks fearing mortgage arrears many lenders have either withdrawn from the market or increased the checks made on borrowers. It is a very difficult time for first time buyers and this will undoubtedly have an effect at 2nd and 3rd time sellers.
My advice to first time buyers is to save for 6 months and come up with 5%, if your not in an ability to save a deposit the question will be raised on how you can afford mortgage and insurance payments along with all other associated costs such as furniture, conveyancing, etc.
Where as 5 years ago most first time buyers had a deposit of 5% or more, in today's sky high property prices clients are struggling to come up with the deposit.
100% mortgages, a relatively new, mortgage product in the UK were aimed at solving this problem. They would often allow first time buyers the ability to purchase a property without the need of saving for a deposit. They are even mortgages offering 125% of the loan amount.
Unfortunately with the current credit crunch effecting the LIBOR mortgage rate and banks fearing mortgage arrears many lenders have either withdrawn from the market or increased the checks made on borrowers. It is a very difficult time for first time buyers and this will undoubtedly have an effect at 2nd and 3rd time sellers.
My advice to first time buyers is to save for 6 months and come up with 5%, if your not in an ability to save a deposit the question will be raised on how you can afford mortgage and insurance payments along with all other associated costs such as furniture, conveyancing, etc.
Monday, 22 October 2007
The end of 100% Mortgages?
Rumors have been circulating over the last 48 hours that many of the so called 100% - 125% Mortgages may be withdrawn from the market.
With the current credit crunch effecting many finance companies it seems the risks involved with lending on top of the secured mortgage may outweigh the benefits.
It is already close to impossible for people with adverse credit to obtain 100% mortgages unless they opt for an adverse credit mortgage from Future.
The main players being BM Solutions, Northern Rock & Mortgage Express who all offer over 100% mortgages by securing a 95% mortgage on the property and then offer an unsecured loan up to £30,000.
Interest rates for these specialist products have increase faster than the current base rate in recent years with some being over 2% more than base. 100% mortgages often tend to have higher fees attached such as booking fees, valuation fees and arrangement fees. All of which makes this type of lending the most expensive on the market.
I will update this blog when I receive news on the current situation with Future offering 100% later this week. I hope for the sake of client needing such lending that the mortgages will still be on offer.
Much of the entry level properties in the UK are currently purchased by buyers who obtain 100% mortgages due to having insufficient deposits. If these clients can no longer obtain finance for the property purchase it will be a potentially dangerous situation for the UK housing market.
Search the whole market now for 100%-125% Mortgages Wales.
Mortgage Quote
With the current credit crunch effecting many finance companies it seems the risks involved with lending on top of the secured mortgage may outweigh the benefits.
It is already close to impossible for people with adverse credit to obtain 100% mortgages unless they opt for an adverse credit mortgage from Future.
The main players being BM Solutions, Northern Rock & Mortgage Express who all offer over 100% mortgages by securing a 95% mortgage on the property and then offer an unsecured loan up to £30,000.
Interest rates for these specialist products have increase faster than the current base rate in recent years with some being over 2% more than base. 100% mortgages often tend to have higher fees attached such as booking fees, valuation fees and arrangement fees. All of which makes this type of lending the most expensive on the market.
I will update this blog when I receive news on the current situation with Future offering 100% later this week. I hope for the sake of client needing such lending that the mortgages will still be on offer.
Much of the entry level properties in the UK are currently purchased by buyers who obtain 100% mortgages due to having insufficient deposits. If these clients can no longer obtain finance for the property purchase it will be a potentially dangerous situation for the UK housing market.
Search the whole market now for 100%-125% Mortgages Wales.
Mortgage Quote
Sunday, 21 October 2007
A new way to learn about finance.
FruitMortgages.com, a new internet based mortgage portal designed to aid UK consumers make informed choices on their mortgage and insurance need.
The website offers users information on the different types of mortgages available such as Fixed Rate Mortgages and Tracker Mortgages. It also offers information on the different types of mortgage holders such as first time buyers, adverse credit mortgages, re-mortgage buyers and buy to let mortgage investors.
FruitMortgages.com offers access to independent mortgage brokers who have whole of market access to the latest mortgages. The mortgage broker can then offer mortgage quotes based on the clients circumstances.
FruitMortgages.com is aimed to connect people searching for a mortgage quote with independent mortgage advisers in the UK.
“I wanted to create a website where users can learn about the different types of mortgages available and have the ability to speak directly with a qualified independent mortgage broker.” said Daniel Morgan the Founder of the website.
The company would like to eventually offer users the ability to search for mortgages on the website and apply online. Currently users can gather information and request a call back from a qualified mortgage adviser. The mortgage adviser can then either meet with the client or produce a mortgage quote over the phone.
The website covers the whole of the UK through a network of over 1800 IFA’s and Mortgage Advisers.
As the usage of the internet continues to grow it will be interesting to see how online mortgage portals such as FruitMortgages.com shape the future of the UK mortgage industry.
The website offers users information on the different types of mortgages available such as Fixed Rate Mortgages and Tracker Mortgages. It also offers information on the different types of mortgage holders such as first time buyers, adverse credit mortgages, re-mortgage buyers and buy to let mortgage investors.
FruitMortgages.com offers access to independent mortgage brokers who have whole of market access to the latest mortgages. The mortgage broker can then offer mortgage quotes based on the clients circumstances.
FruitMortgages.com is aimed to connect people searching for a mortgage quote with independent mortgage advisers in the UK.
“I wanted to create a website where users can learn about the different types of mortgages available and have the ability to speak directly with a qualified independent mortgage broker.” said Daniel Morgan the Founder of the website.
The company would like to eventually offer users the ability to search for mortgages on the website and apply online. Currently users can gather information and request a call back from a qualified mortgage adviser. The mortgage adviser can then either meet with the client or produce a mortgage quote over the phone.
The website covers the whole of the UK through a network of over 1800 IFA’s and Mortgage Advisers.
As the usage of the internet continues to grow it will be interesting to see how online mortgage portals such as FruitMortgages.com shape the future of the UK mortgage industry.
Saturday, 15 September 2007
Northern Rock on a rocky road
NORTHERN ROCK NEWS UPDATE
You have all probably heard hours of news reports regarding the Northern Rock loan request from the Bank of England. I was so interested to see how scared everyone one gets by media gossip and reports from "Experts".
Northern Rock borrows money from the money market (other banks) and offers it to retail customers (me and you) in the form of mortgages, loans and other forms of credit. The public savings in the company amount to very little.
The main reason NR went to the Bank of England was due to them being unable to supply demand for their mortgages.
NR have become a victim of their own success however they have yet to request or draw down a penny from the BoE.
If you remember what happens when the "experts" predict petrol shortages they are usually correct. Not because there are any problems with the oil industry but rather the media scare the public into stocking up. The result is more demand which effects the supply chain.
The same situation threatens to effect the finance industry. If the media continue to report on problems that don't yet exist we may well see the media predicting future events by creating them in the first place.
I suggest that all my readers take stock of the situation and realise that the British finance industry is one of the safest in the world.
If you need advice on your mortgages then remember to visit my mortgage advice portal.
You have all probably heard hours of news reports regarding the Northern Rock loan request from the Bank of England. I was so interested to see how scared everyone one gets by media gossip and reports from "Experts".
Northern Rock borrows money from the money market (other banks) and offers it to retail customers (me and you) in the form of mortgages, loans and other forms of credit. The public savings in the company amount to very little.
The main reason NR went to the Bank of England was due to them being unable to supply demand for their mortgages.
NR have become a victim of their own success however they have yet to request or draw down a penny from the BoE.
If you remember what happens when the "experts" predict petrol shortages they are usually correct. Not because there are any problems with the oil industry but rather the media scare the public into stocking up. The result is more demand which effects the supply chain.
The same situation threatens to effect the finance industry. If the media continue to report on problems that don't yet exist we may well see the media predicting future events by creating them in the first place.
I suggest that all my readers take stock of the situation and realise that the British finance industry is one of the safest in the world.
If you need advice on your mortgages then remember to visit my mortgage advice portal.
Wednesday, 11 July 2007
Fixed, Discounted or Tracker? After effect of interest rate rise.
Since the Bank of England raised interest rates for a 5th time since August 2006 to 5.75% many people across the UK are worried about how high rates may rise.
In my own opinion I don't feel rates will rise above 6%, though I could be wrong.
If we work on my opinion that rates will not rise more than another 1/4% lets see if its still worth people deciding on a fixed rate mortgage.
Currently lenders across the board seem to be encouraging people not to fix their mortgage for less than 3 years by introducing higher fees and interest rates.
The banks are afraid to fix to many of their clients mortgages in case of further rate rises, thus increasing their costs but fixing the borrowers. If you now look at the current fixed rate mortgages available they almost all have a high set up fee running into £1,000's along with higher interest rates, often above 6%.
On the other hand we can now see some very competitive variable rates in the Tracker and Discount arena. Many have rates as low as 5.19% with a lower arrangement fee compared to its fixed alternative.
If we compare these two options we now only have to decide how much we feel rates are likely to rise, very few experts are predicting 4 more rises. If rates rose 1% it would see our earlier deal rise to 6.19% with still lower fees. Remember of course that this 1% rise would happen in four stages over 12 months. By this time the lower rate may have saved you £100's in interest payments.
Another important point to remember is that arrangement fees on non-fixed products is normally below £500 whereas arrangement fees for fixed rate mortgages tend to range from £500 - £1000.
If you have a small mortgage or intend to switch mortgages within say 2 years, a £1000 arrangement fee could be a large % of your loan and increase the amount you originally borrowed.
If you would like to learn more about the different products available or would like to speak to a local mortgage advisor and broker please visit FruitMortgages - Your local independent mortgage brokers.
Mortgages - Local Mortgages Brokers - Mortgages Wales - FruitMortgages.com
In my own opinion I don't feel rates will rise above 6%, though I could be wrong.
If we work on my opinion that rates will not rise more than another 1/4% lets see if its still worth people deciding on a fixed rate mortgage.
Currently lenders across the board seem to be encouraging people not to fix their mortgage for less than 3 years by introducing higher fees and interest rates.
The banks are afraid to fix to many of their clients mortgages in case of further rate rises, thus increasing their costs but fixing the borrowers. If you now look at the current fixed rate mortgages available they almost all have a high set up fee running into £1,000's along with higher interest rates, often above 6%.
On the other hand we can now see some very competitive variable rates in the Tracker and Discount arena. Many have rates as low as 5.19% with a lower arrangement fee compared to its fixed alternative.
If we compare these two options we now only have to decide how much we feel rates are likely to rise, very few experts are predicting 4 more rises. If rates rose 1% it would see our earlier deal rise to 6.19% with still lower fees. Remember of course that this 1% rise would happen in four stages over 12 months. By this time the lower rate may have saved you £100's in interest payments.
Another important point to remember is that arrangement fees on non-fixed products is normally below £500 whereas arrangement fees for fixed rate mortgages tend to range from £500 - £1000.
If you have a small mortgage or intend to switch mortgages within say 2 years, a £1000 arrangement fee could be a large % of your loan and increase the amount you originally borrowed.
If you would like to learn more about the different products available or would like to speak to a local mortgage advisor and broker please visit FruitMortgages - Your local independent mortgage brokers.
Mortgages - Local Mortgages Brokers - Mortgages Wales - FruitMortgages.com
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