Avoiding the six-month wait to remortgage

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    #16
    Bridging & Remortgage

    I don't fully understand what this process is. (ex: when people say that they are going to bridge against the value of the home as opposed to the open market price of the home). Can somebody please clarify?

    Comment


      #17
      Originally posted by dustindle View Post
      I don't fully understand what this process is. (ex: when people say that they are going to bridge against the value of the home as opposed to the open market price of the home). Can somebody please clarify?
      BRIDGING LOAN: loan to fund purchase of new house short-term (usually before mortgagor has sold old house and discharged mortgage on it).

      REMORTGAGE: discharge of old mortgage (and repayment of old loan), and immediate creation of new mortgage (to secure replacement loan).
      JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
      1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
      2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
      3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
      4. *- Contact info: click on my name (blue-highlight link).

      Comment


        #18
        Originally posted by dustindle View Post
        I don't fully understand what this process is. (ex: when people say that they are going to bridge against the value of the home as opposed to the open market price of the home). Can somebody please clarify?
        Bridging loans and same day re-mortgages used to be a way to buy properties with very little or no money down. It worked by buying properties BMV (below market value) with a bridging loan and then instantly remortgaging them based on the OMV.

        For example:

        OMV: 100k
        PP: 75k (paid by deposit + bridge or 100% bridge)
        Remortgage: 75%LTV of 100k = 75k
        Result: Initial deposit recovered

        This used to work when the lenders allowed same day remortgages, which is not the case anymore. Most lenders now expect the owner to own the property for 6-12 months.
        With bridging loans costing up to 2% pm, 6-12 months can be very expensive whilst houseprices are falling and lenders keep changing their criteria.

        In my opinion it's a risky and expensive strategy in todays climate, but not impossible.

        Comment


          #19
          thanks guys, that information definitely helps. what would you guys recommend in terms of buying a house with little or no money down? i'm looking to buy investment homes, not for my own residence.

          Comment


            #20
            There are many providers of various NMD schemes. If you are considering your options I would recommend reading this report first:

            http://www.nomoneydownfinanceexposed...daceiling.html

            It provides a good overview of the schemes on offer and highlights the tax issues and legal issues arising from 'creative financing'. It will help you to make an informed decision.

            I hope that helps.

            PS.: Please note that I am in no form or shape associated with the author of the report. I bought the report myself a while ago and felt it was very good value for money. I initially attempted to gather the same information by myself but it proved very difficult and time consuming.

            Comment


              #21
              The easiest way to get your deposit back out would be to raise the initial deposit, buy 30%+ BMV, remortgage after 6 months. Obviously you need to budget further drops in houseprices in and/or increase the value of the property with a make-over otherwise it doesn't quite work out.

              Another way is to use a lender, who offers further advances once the property is registered in your name. So you buy BMV, do a bit of a make over and try to increase your borrowings....

              I know, 25% deposit is steep but you don't need to wonder if you have committed mortgage fraud, you will sleep well and hopefully be able to recycle your deposit to use it over and over again. It only leaves you with the small task of raising a deposit and finding properties well below market value (if there is such a thing as 'below market value')

              Comment


                #22
                Looking for properties with no deposit is what got alot of people into trouble, and the BTL market into a mess. If you cant raise a deposit, you are in no position to buy property - especially in this market.

                Comment


                  #23
                  I would advise to never even contemplate a property without a deposit, It's a safety net.

                  Comment


                    #24
                    Without sounding defeatist, now is not the time for novice landlords with no deposits, it really is a time of uncertainty for everyone at the moment... please be careful!
                    If you feel you must go ahead get specialist advice, and take a couple of days out to read all the negative posts on Landlord Zone to see what your getting yourself into.
                    Good luck!

                    Comment


                      #25
                      Hmm, thanks guys. I really appreciate the advice, and will definitely take it into consideration. Right now, I am trying to educate myself about the homebuying process, so I am actually not going to buy a property as of yet.

                      By the way, what do you mean when you say "raise a deposit", landlordlee. Like, does that include qualifying for loans?

                      Comment


                        #26
                        Originally posted by dustindle View Post
                        Hmm, thanks guys. I really appreciate the advice, and will definitely take it into consideration. Right now, I am trying to educate myself about the homebuying process, so I am actually not going to buy a property as of yet.

                        By the way, what do you mean when you say "raise a deposit", landlordlee. Like, does that include qualifying for loans?
                        "Deposit" is one of those words that has a correct usage and an incorrect usage.
                        CORRECT: on exchanging contracts, P usually has to pay part of the total purchase price: the deposit, often 10% but sometimes less.
                        INCORRECT: total purchase price minus mortgage advance = amount that P funds from own resources.
                        JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                        1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                        2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                        3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                        4. *- Contact info: click on my name (blue-highlight link).

                        Comment


                          #27
                          remortgage of an auction property

                          Do any lenders allow a remortgage of a property bought at auction or do you still have to wait 6 months.

                          Comment


                            #28
                            How do you finance the auction purchase itself?
                            JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                            1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                            2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                            3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                            4. *- Contact info: click on my name (blue-highlight link).

                            Comment


                              #29
                              I have plenty of equity in my home mortgage and can draw down funds easily, so it will be a cash purchase.

                              The idea was to remortgage with uplifted value to repay funds used from home mortgage.

                              Comment


                                #30
                                Originally posted by vwnige View Post
                                I have plenty of equity in my home mortgage and can draw down funds easily, so it will be a cash purchase.

                                The idea was to remortgage with uplifted value to repay funds used from home mortgage.
                                But mortgagees do not like such speedy remortgages; they suspect fraud. Why not finance your auction purchase by mortgage advance with an obligation for the mortgagee to make further advances financing later improvements enhancing the property's value?
                                JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                                1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                                2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                                3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                                4. *- Contact info: click on my name (blue-highlight link).

                                Comment

                                Latest Activity

                                Collapse

                                • Mortgage News
                                  by loanarranger
                                  The following article has appeared in one of the Mortgage Trade journals reporting on views expressed by the Association of Mortgage Intermediaries an influential trade body within the mortgage industry.

                                  "Mortgage rates are likely to rise in the first quarter of 2016 as lenders look...
                                  23-12-2015, 19:43 PM
                                • Reply to Mortgage News
                                  by jpkeates
                                  I suspect the reverse will be true, to be honest.
                                  I suspect that many (most?) landlords don't have any idea of most of the recent changes in regulations for landlords - the people who contribute to this forum are not representative of landlords in general.

                                  The awareness of landlords...
                                  14-01-2022, 09:54 AM
                                • Reply to Mortgage News
                                  by loanarranger
                                  Thank you both for your constructive responses, it is evident from your views particularly as you are seasoned professionals that a significant number of less well informed investors will possibly take fright at the ramifications of the proposed changes. Although I am an investor as well as a specialist...
                                  13-01-2022, 22:53 PM
                                • Reply to Mortgage News
                                  by jpkeates
                                  The Minimum Energy Performance of Buildings Bill which is only a start point set the limit at £20,000.
                                  In discussions, there was a view that that figure might have to be reduced to £10,000.

                                  That was a private members bill.
                                  But it was the work of the MP who was murdered and...
                                  13-01-2022, 16:30 PM
                                • Reply to Mortgage News
                                  by boletus
                                  Do you think that cap level is likely? The consequences are quite obvious.

                                  (On a personal note, this would be a win for me as all my rentals would quite easily get to C and it would drive out the competition. Plus I'd upgrade my F ppr to a bigger F ppr.)...
                                  13-01-2022, 16:14 PM
                                • Reply to Mortgage News
                                  by jpkeates
                                  The proposed legislation changing the requirement to be C raises the high cost exemption to £10,000.

                                  A change of that nature would cause me to exit the business.
                                  I'd either have to sell a property or mortgage one to be able to afford the exemption (or to get some of the properties...
                                  13-01-2022, 16:08 PM
                                • Reply to Mortgage News
                                  by boletus
                                  On a more positive note, there is currently a 'high cost' exemption for F&G properties needing over £3500 improvements. Something similar would very likely apply for D&E's;

                                  https://www.gov.uk/government/public...e-requirements

                                  Also worth pointing out that many lenders...
                                  13-01-2022, 15:58 PM
                                • Reply to Mortgage News
                                  by boletus
                                  I was making two separate points, I should have posted them separately.

                                  The first being landlords will opt out of the register if it is (increasingly) used against them -and not just by mortgage lenders.

                                  The second was, which exact t&c will they use to call in the loan?...
                                  13-01-2022, 15:46 PM
                                • Reply to Mortgage News
                                  by loanarranger
                                  Hi Boletus

                                  Long time no communication.

                                  Even if the Opt Out is exercised the lender will indeed seek a copy of the current EPC if it is being asked to either do a product transfer or a new remortgage application: furthermore the surveyor on carrying out the property inspection...
                                  13-01-2022, 15:11 PM
                                • Reply to Mortgage News
                                  by boletus
                                  Opting out of the register might become routine practice;

                                  https://www.gov.uk/guidance/energy-p...w-do-i-opt-out



                                  What part of the t&c's could they use to call in the loan?...
                                  13-01-2022, 10:10 AM
                                Working...
                                X