Wimbledon Pin Mortgage Update

The June 2015 Wimbledon pin was certainly a full room. With great contribution from a variety of property gurus. The mortgage update slot was delivered by Howard Bowes, Managing Director of Harvey Bowes Limited. There were three main topics of discussion in this section of the evening:

House Prices in England & Wales

The latest reports from Land Registry show some impressive overall annual figures which show that the market is going in the right direction. With a reported increase of 5.1% from April 2014 to April 2015. This took the average house price from £171,041 to £179,817.

London prices were up an impressive 10.9% over the same period according to the same source, resulting in an average house price of £474,544

What does this tell property investors? Firstly that the market is on the up overall. It also means that investors who are looking to flip property can demonstrate from the stats that potential buyers need to make decisions. After all, in a moving and upward market, a slow decision could mean missing the opportunity altogether or potentially resulting in a higher price.

There is also potential opportunity for property investors who are currently holding property for the long term. Because in a rising market, there may be opportunity to review current mortgages with a view to obtaining a further advance or re-mortgaging. This could create either a more favourable monthly mortgage payment and increasing cash flow or the potential to release capital for further investment if the circumstances allow.

Financing a Property with a short leasehold

From time to find an investor may find a great deal which involves a property with a short term remaining on the lease. How can one mortgage short term leasehold properties?

Of course, the best course of action is often to negotiate with the vendor of the property and see if a lease extension can be included in the sale process. However, this can be time consuming, and therefore on a time sensative deal it may not be possible to do this.

The next course of action would depend on the short/long term goal. If one is looking to sell the property on, then short term finance is usually the right thing to go for. Let the finance company know what you propose to do about the lease and how you propose to sell the property and repay their loan.Aldermore commercial mortgages hmo and btl mortgage

However, where an investor is looking to hold the property, long term finance maybe initially possible without the immediate need to extend the lease. There should always be a strategy to extend the lease at some point, however, if one is holding for the long term it may be possible to re-mortgage the property at a later date and deal with the lease extension then. That has its own advantages and disadvantages which would need to be considered. However, lenders such as Aldermore Commercial and Skipton Building Society will allow the purchase of a leasehold property where the remaining lease at the end of the mortgage term is just 40 years. Therefore, by taking a 5 year mortgage it may be possible to purchase a property with just a short lease such as 45 years on a standard BTL  or a commercial mortgage product, provided the property is being purchased as an investment.

Focus on Bridging Finance Solutions

Briding Finance for short term leasehold propertiesDuring the update, Howard also refers to one specific bridging lender, being Bridging Finance Solutions. They offer the opportunity to potentially have a bridging loan based on 85% of the purchase price provided that remains at no more than 75% of the open market value. This bridging finance company will also fund the purchase of the property where the investor intends to convert to a HMO, and provided there is a sufficient up lift in the value of the property once any refurbishment and conversion work has been carried out, they will lend up to 100% of the conversion and refurbishment costs.

More information

For more information on any of the subjects above, or for expert mortgage and finance advice, contact Howard Bowes on 029 2175 4150.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

all above information is current on date of publication but lender criteria and other matters are subject to periodic change.

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About harveybowes
Mortgage Broker and founding Director of Harvey Bowes Limited. A mortgage broking practice with bases in Cardiff & Poole, UK. We take a fresh and positive approach to mortgage broking which pays dividends for both our clients and frankly, ourselves. The team at Harvey Bowes are expert advisors in all aspects of mortgages from residential to commercial and buy to let.

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