Postitive signs in the finance world are likely to continue in 2013

2012 has been another interesting year for the lending market, with many different reports. Some good and some poor.

There have been government initiatives that have made a measurable difference. George Osborne announced the Funding for Lending Scheme in July 2012 and this has already offered some stimulus to the market. We’ve seen a real price war between lenders, particularly for residential mortgages, who have benefitted from the scheme and there is also good availability of loans at higher loan to value (LTV) ratios. We’ve also seen some of the high street lenders approach businesses to make them aware that they are open to lend funds for the right proposal.

Again in the residential market, 90% LTV deals have reduced in price in the last quarter of the year, making the repayments more affordable to first time buyers who qualify for a mortgage and this should be taken as a positive step.

Kensington Mortgage Corporation has already returned to the market with an appetite to lend and some quirky criteria points which should make lending easier for those otherwise unmortgagble. Their range of products are available to residential borrowers and property investors.

Precise mortgages has expanded its product range and has introduced mortgage deals which are competitive enough to take on many of the high street banks.

More lenders have joined the Buy to Let mortgage arena and the competition between lenders has created criteria shifts which will include more potential borrowers and an albeit small price war. Lenders such as Precise, Kensington and Aldermore (to name just 3) will lend to established or experienced landlords without needing a minimum income threshold to be met.

Just before Christmas, figures released reported “average house prices down 0.3% in 2012, however, when the whole report is taken into consideration it is another positive sign. The report by Hometrack reports that 20% of the country reported an increase, up from 12% in 2011 – so while some regions are reporting tougher times in the housing market, the areas who are ‘on the up’ is increasing. Let’s hope that ripple continues through 2013.

The Secured Loan sector has reported considerable growth in 2012 and predicts a similar trajectory for 2013. New lenders also entered this market for the first time. This shows that lending is out there to access. Industry experts predict reducing rates for secured loans throughout 2013, making the cost of borrowing cheaper for home-owners. There is also a report of potentially six new lenders coming to the market in the near future.

As for politics, there is no doubt that in this continuing tough economic time, any chancellor would be under the microscope. Predictions for the future remain varied, but recent reports that we may have entered a ‘triple dip’ recession certainly cause concern across the markets.

Despite this, Prime Minister David Cameron has stated that chancellor George Osborne will still be chancellor at the next election after growing calls for him to be moved. The fact is, the global economy is under strain and no matter what any chancellor could do, this is not going to change. But in the main, there is some good progress in a very tough global economy.

The concept that borrowing more would bring the country out of recession does not make basic commercial sense, although it may get votes. And let’s face it, no matter what you view of politics and who would be right as chancellor, surely there cannot be a logical brain in the country thinks Mr. Balls could stand a remote chance of doing the job.

Maybe I am the eternal optimist, but there is a lot to be positive about as we approach 2013. Certainly for Harvey Bowes Mortgages which has enjoyed another year of continued and substantial growth.

It is certain that there are opportunities in the market – it is up to us to find them. Evidence from a wide range of reports and from our practical ‘hands on’ experience as mortgage and finance brokers is a clear demonstration that finance is out there to be accessed – and that applies for both SME’s and residential lending.

Easy for us to say as brokers, but it is even more important than ever to use a broker for advice and implementation of a loan. Ultimately, as brokers, we work for you, our client and not the lender. While we have a duty of diligence to employ, our job is to put any finance or mortgage application forward in the best possible light. And using this expertise could make the difference between securing finance and being flatly declined.

To discuss your business or personal funding requirements, please contact on the of the team at Harvey Bowes today on 029 2115 6918.

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Remortgage BTL within 6 months

How do you remortgage your Buy to Let property within 6 months? Take a look at our brief video for an insight.

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The Council of Mortgage Lenders (CML) have produced guidelines on remortgaging a property within six months of purchase; and rightfully so. It must be remembered however, that these are only guidelines, and while some lenders approach this with little flexibility, there are of course lenders who have a practical and realistic approach. The CML policy on remortgages within 6 months is only a guideline and not a rule. As such, some off-the-shelf BTL mortgage lenders will allow a remortgage within 6 months provided there is a reasonable explanation as to why the applicant would look to do so. You can also raise capital on the remortgage if a higher value on the property is agreed by the lenders surveyor. This is a great solution for property investors who are looking to expand their portfolio and either buy at a competitive price, carry out improvements to enhance the property value, or use a combination of both skills.remortgage btl property in 6 months

In the video above, we speak of the ability to remortgage your investment property inside of 6 months. There are no tricks to this, it is simply being aware of acceptable criteria for certain lenders. The example we use is of Mortgage Trust (who are not the only lender who will accept a remortgage within 6 months of purchase). Mortgage Trust is a lending arm of Paragon. They will allow a remortgage of a property within 6 months of purchase provided there is a valid reason for doing so. This is an ideal solution for someone looking to recycle the deposit for the property so that it can be used for another purchase, for example. However, the figures have to work. If you buy the property sufficiently below market value and/or improve the property by way of renovation and therefore enhance the value – Mortgage Trust will value the property for mortgage purposes at its current market value. The valuer they send will decide. It is therefore prudent to meet the valuer so that you are able to explain any works carried out. If the valuer agrees an uplifted value from your purchase, you can (currently) borrow up to 75% LTV on the uplifted value with the lender we using for this example, Mortgage Trust. This may allow you to release equity from the property based on the increased house value.

Redeeming your purchase mortgage? The next question we are asked with this strategy is about redeeming the mortgage used to purchase the property. There are usually high early repayment charges and in the current market they are for a minimum of 12 months from purchase. There are some simple solutions:

  1. Initially take a purchase mortgage which is free of any early repayment charges. These are (currently) available, but usually at a lower loan to value such as 60%. If you have the funds to do this, given that you are able to remortgage at 75% of the open market value with Mortgage Trust within 6 months, you can return much if not all of the funds to your cashflow if the figure stack up.
  2. Take a bridging loan for the purchase. This may be needed if the property is not suitable security for a straight forward mortgage at the point of purchase. If not, make sure you plan your costs well, including exit fees from the bridge in addition to the set up costs and interest. you’ll find that the figures for this usually work out very similar to taking a regular BTL mortgage (if available for the property) and paying an early repayment charge.
  3. Port the purchase mortgage. If you can make the figures stack, this is a great way to transfer the mortgage to an ongoing purchase. If your business model is to buy 2 or 3 (or more properties) within a 12 month period, you can take a Buy to Let mortgage which is portable to a new property, port it for the day of completion and have the Mortgage Trust remortgage within 6 months ready to complete on the existing property. Although there are fees to pay for Porting a BTL mortgage, these are far less than paying an early repayment charge. This strategy works if it is carefully planed. And if your plan is to buy properties of similar value at the starting point, the opportunity to Port a mortgage will be that much more easy.
  4. Pay the Early Repayment Charge. If the figures really work, you might opt just to swallow the ERC, but before jumping to a decision to do this, make sure your mortgage broker has explored all the options.

harvey bowes mortgage broker cardiffAnother alternative is to take a commercial BTL mortgage. Commercial mortgages are assessed by lenders in an entirely different way. As a result, even if you cannot meet criteria to remortgage within 6 months with an ‘off the shelf’ BTL mortgage deal offered by one arm of a lender, you may still be able to achieve it by using the commercial arm of the same lender.

As an important note, we always recommend that a property investor looking to remortgage within 6 months should obtain their own RICS survey on their property. Although the lender will carry out their own survey, being armed with the evidence of how you arrived at your ‘before’ and ‘after’ values can be critical in meeting the objective you are looking for. Contact us for further reasons why this helps and how to present the information to the lender in the best possible light. Call one of the team at Harvey Bowes Limited: 029 2067 6716.

Who are Harvey Bowes Mortgages

HB_gears_003Harvey Bowes are a practice of award winning mortgage brokers who specialist in helping property investors acquire mortgages for their investment properties, whether that be HMO’s, commercial properties or simply standard residential investments. We are proud to be strategic partners of Shawbrook bank. We have a vast knowledge of the finer detail of lender criteria and consider ourselves to be more than just Mortgage Brokers, we are deal makers.

When it comes to BTL and investment property, we are happy to talk through options with you, even if it just bouncing around ideas. We can add to your strategy and business plan as well as help you by way of advice on BTL mortgages. Why not talk to one of the team today on 029 2175 4150

Buy to Let – Tenancy duration at a record high

The average length of tenancy in the UK has risen to a record high of 20 months, according to new research from the Association of Residential Letting Agents.

Strong competition for new properties and an ongoing lack of mortgage finance has increased the importance of regulation in the rental sector as 58 per cent of ARLA members now say there are more tenants than properties available.

Positive figures in the Property Market

Figures for November show the lowest monthly seasonal drop in new ‘for sale’ and ‘sold’ properties for at least five years.
Data from the Agency Express Property Activity Index reflects a “surprising resilience” in the property market as UK residential properties achieving sold status decreased by 1.2 per cent while new ‘for sale’ listings fell 7.3 per cent between October and November.
These figures represent the lowest seasonal drop since the index was started in 2007.

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