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Category: Mortgages

property markets

Subdued Property Markets – Developer Survival

According to the Royal Chartered Institute of Surveyors (RICS), demand for residential property continues to decline. The number of homes that have come onto the residential market has increased gradually.

This, however, has been credited to the offloading of some buy-to-let properties. Although supply is not significantly out of balance with demand, the subtle changes in the market over the recent years show that the residential property markets remain subdued. Despite the increase in stock levels with estate agents, the supply of new properties on the market remains at an all-time low.


Property Markets – Price Growth, But Demand Declines

It really doesn’t make sense to develop new properties when demand is dropping. Or does it? With demand for rental properties holding their own and a drop in landlord instruction, rents are going up.

Consequently, even a relatively short-term stint as a landlord will pay off. This is true despite the loss in tax breaks for individuals. Developers that have residential property that has become hard to shift because of the lull in the property markets could consider becoming landlords for a short period until the market develops some buoyancy. As a limited company, they will still enjoy many of the tax breaks available.


Timing is the Key

The capacity to time the upsurge in new demand often determines the success of a property developer. Growth and shrinkage in property markets ebb and flow with economic cycles. Those developers that have been in the business for the long game understand this and are unlikely to consider slow-moving development stock as a heavy burden.

If standing stock that is providing some return, waiting for the next upturn means they will have it ready when demand returns. In the interim, the property that they have on the books could be used as collateral to develop commercial spaces which are new in demand. This is especially true for shared workspaces and warehousing.

It isn’t expected that the property markets are going to pick up toward the end of 2018 either. More likely is the possibility that they will remain subdued as we approach Brexit D-day early next year. The uncertainty of how the economy is going to perform post-Brexit is definitely one of the factors that add to the subdued property market.


Flexibility and Diversity

Ultimately, survival is the flexibility to diversify as rapid market changes take place. For some developers, sitting on unsold stock may mean that they worry about not having the cash flow to start a new project even in a different property market.

When this happens, it’s time to go to an experienced broker such as Sam Hoban at Belgravia Property Finance. Sam has extensive knowledge and experience. He possesses an understanding of how to source financially different products to resolve different situations. Specialist brokers like him have the resources to deal with most property deals.

buy to let

Significant Buy to Let Changes from Aldermore

The buy-to-let market has experienced the implementation of significant tax-related changes. The changes have created problems mostly for individual landlords.

It has also reduced the introduction of new speculative landlords to the property market. Individuals are now discouraged from developing large property portfolios unless they form a limited company to enjoy the tax relief available.


Company Landlords Benefit from the Buy to Let Changes

The market has been waiting for a change to provide additional relief to both developers and buy-to-let landlords. Aldermore the specialist buy-to-let financiers have responded to the need by introducing new, more flexible mortgage products. From 23rd April, company landlords have been able to access the company’s more flexible mortgage products. These were previously only available to individual landlords.

The bank has reduced its early settlement fees. Furthermore, it is now offering remortgage products that don’t bring legal, product, or valuation fees with them. This fee structure makes a difference that will offer an impact to all their clients. Additionally, there will now be reduced rates to mortgages for multi-unit freehold properties and HMOs.


Competitive Rates

Rates start at 4.38% for the HMO and multi-unit freehold properties. This is for a two year fixed rate product and 75% loan to value. They have also reduced term variable rates across the range of their products. Some rates start as low as 3.28%. Their new remortgage products also enjoy no product, valuation, or legal fees either.

Aldermore is also rewarding their existing customers. Multi-property mortgages with discounted rates are available for those that have been loyal customers. Clearly, it pays to stay. New customers that submit a second or subsequent application or those seeking a remortgage will enjoy these products too.

They have also made it easier for landlords that have only recently started trading. Only one year accounts will now be necessary for those that are self-employed. A reduction in early repayment charges makes the offer even more attractive.

Aldermore’s commercial director of mortgages, Charles McDowell, says, “The sector has experienced significant change recently. So we regularly review our products to ensure we continue to support a broad range of customers. No matter how big or small their portfolio is”.


Technology Changes Improve Accessibility

Their own research has indicated that 41% of landlords intend to increase their portfolio over the next year. Interestingly, 15% of those that are not intending to expand will still seek to remortgage some of their properties.

Aldermore clearly understand how making changes to their products not only supports the industry but their customer base too. Focusing not only on financial accessibility but on technology too, customers can access their mortgages from their mobile phones too.

From April 23rd, brokers have been able to access their portal, get a quote, or submit a decision in principle from any device. This facilitates quicker decision making and access to the finance in a market where circumstances change really quickly.


Auction Finance – Solutions For Quick Property Purchase

Property developers attend auctions to weed out some of the best investment opportunities available. Auctions, however, present a multitude of complexities that do not come with mainstream property purchases.

Financing an auction property can bring with it headaches and technical problems not seen in traditional property purchase scenarios. Auction finance is specifically geared to deal with these issues.


Auction Finance – What’s the Difference?

Most commonly, auction finance is a form of bridging finance. It allows the property purchaser some breathing space to get more traditional forms of finance in place.

In some cases, the finance must be completed quickly to secure the auction sale. The loans are usually secured against the property that has been purchased or other property that the developer already owns. The idea is to make the funding available as quickly as possible to allow completion.

Funding can be confirmed within hours. This is in complete contrast to the days or weeks that financing can take in traditional situations. The process is less onerous, and lenders will be more interested in the security available.

Auction finance sources will also lend to individuals who are self-employed as well as limited liability partnerships, limited companies, partnerships, sole traders, and employed individuals. Their scope for consideration is far wider than the average high street bank.


Not Just A Bridging Loan

Auction finance does not always involve bridging loans, however. When an investor or property developer sees a property they would like to purchase at auction, they can prepare financing ahead of time.

Mortgages and buy-to-let mortgages can be agreed in principle well before the hammer falls. This places the bidder in a position where they will know where their funding limits lie. Situations where the bidder knows their maximum bidding threshold places them in a position of strength.

Auction sales move very quickly. Especially for those new to them, it can be nerve-wracking and overwhelming. When the hammer drops, 10 percent of the price has to be paid up front.

Under most circumstances, the balances will be settled within 28 days. It is usually the 28 day period that necessitates auction finance in the form of a bridging loan.

If a mortgage has been agreed in principle and where it is being secured on either the purchased property or other assets, it is on rare occasions possible to finance immediately using a mortgage agreement.

To achieve this, you may need an experienced advisor broker. Your broker will know which finance companies work the fastest to ensure completion on time while still meeting all the requisite legal requirements.


Commercial Property

Auction finance is not only available for residential property. A business may want to extend its premises or buy new premises at a different location. If it is expanding, there may be good reason to buy additional properties.

Commercial property financing is also available under auction finance and is a good avenue to purchase value for money property. In the same way that individuals may want to seek a mortgage, it is probable that a commercial purchase at auction will require both bridging finance and a commercial mortgage to obtain the property.

If you are an individual seeking to buy a second home or a business purchaser for new manufacturing premises, good financing advice will be crucial. Established and reputable brokers will be well networked and able to find you a good deal.

Whether you wish to use a traditional lender or will need to find a private lender, Belgravia Property will be able to guide you along the way. For confidential unbiased advice, contact our London office.


As Brexit Looms Closer Will It Affect Overseas Mortgages?


Overseas mortgages are one of those financial products that we’ve all heard of, but probably don’t know all that much about. Most us may even have friends that hold an overseas mortgage, as the British continue their love affair with France and Spain. The “big referendum” has certainly not dampened interest in the European property market and the demand for overseas mortgages has certainly not dried up.


Understanding Overseas Mortgages

An overseas mortgage is a mortgage that is held by a UK resident and secured on a property outside of the UK. The property could be almost anywhere. Most overseas mortgages held by UK nationals are in the EU. Receiving an offer on an overseas mortgage is a bit of a paradox. It’s the same but different. The lenders, as always, are interested in the two main criteria. Affordability and the property that the mortgage is secured upon.

The most common route taken by UK nationals to obtain an overseas mortgage is to remortgage their current home in the UK. This will then pay a substantial deposit on the foreign property that they wish to purchase. When a foreign national buys a property in Europe two factors are a common thread. Lenders demand higher deposits and the interest rates are usually lower than in the UK.


Before Brexit

While the UK remains part of the EU, favourable terms will be available for citizens of the common market. There is, however, much uncertainty being expressed over what lies ahead. Property professionals, brokers, agents, and lenders seem to think that little will change.

Interest in the market seems to have escalated since the infamous Brexit vote. It’s almost as if there has been a bit of a last minute rush. There are a number of UK families that see themselves relocating before Brexit takes place.


Local Lenders

UK banks can and do provide mortgages outside of the UK. If they have an office in that country, then it is perfectly possible for them to lend in that country. That does not mean that they will offer the same terms as they might in the UK. Borrowing abroad also doesn’t mean that the lender is subject to the regulations as laid out by the FCA. High street lender or not.


Foreign Lenders

It is likely that local lenders where you want to purchase a property will be able to offer you a better deal. Specialist brokers will help you to find the best available deal. The terms may be even more favourable than those you would get with a UK lender. Across the Eurozone, there are countries that have much lower interest rates.


After Brexit

The rush for EU property has been fuelled by the motive to obtain fixed favourable terms for overseas mortgages extending beyond the departure of the UK from the EU. That, however, is only part of the story.

Property professionals are optimistic. Most believe that little will change and that the financial relationships will continue much as before. There seems to be little advantage for either side to sever the ties that bind. It is probable that UK nationals will still enjoy some free movement and that Britain may well remain part of the EEA.


Currency and Exchange Fluctuation

Factors such as currency exchange may have the greatest influence on overseas mortgages. The pound took a downturn shortly after the referendum. This took a few property purchasers by surprise midway through a deal. When the homeowner is paying the mortgage in sterling, currency fluctuations will influence affordability. This is something that both the lenders and the borrower must consider carefully.

Considerable strengthening or weakening of the currency used to purchase the property will also influence the long-term return on the property. Buying a property abroad may seem to be an exercise in borrowing money to make a purchase. Considering how much the property will be worth on completion of the mortgage is something that some fail to consider.

There will always be hoops to jump through when funding a property purchase in a country where you don’t live. There are always options to achieve a good funding deal to suit your circumstances. Belgravia Property Finance can offer specialised advice and help to broker deals that are not available on the high street. Contact Belgravia Property Finance for a confidential discussion on the way forward.


Offshore Mortgages – Better Than A Well Kept Secret

One of the frustration that UK nationals living abroad experience is that the nature of their work dictates that they are non-domiciled. The dream of owning a home in the UK can become complicated without the correct advice. Offshore mortgages are very different products to ones offered to UK nationals that live and work in the UK.

Tax laws have been tightened over the last decade that also makes this area of lending even more complicated. A person can be resident in the UK, but non-domiciled. Having a UK-based employer that pays them in sterling may make obtaining an offshore mortgage easier. Even having a non-UK employer that pays in sterling into a UK bank account may make things easier.

The real headaches begin when the UK resident, that also happens to be non-domiciled for work purposes, is paid in foreign currency by a foreign employer. Add to this the complexity of fluctuating exchange rates and you’ll understand why the banks waver when offering offshore mortgages. Most offshore mortgages that fund property purchase inside the UK are funded from lenders based in the Channel Islands.


Offshore Mortgages – Varying Terms

Offshore mortgages are not regulated by the FSA, and before accepting one it is important to check with both your broker and tax advisor how vulnerable you are. Privately funded property purchases are essentially contracted in a way that the contracts can vary from one deal to the next.

This means that there are few hard and fast rules about how your funding agreement will be structured. For most that take this route, the convenience and access to funds combined with the expected long-term investment outcome more than sufficiently compensate for this.


Foreign Residents

UK resident non-domiciled British nationals are not the only people that seek out offshore mortgages. Foreign residents in Britain may struggle to find a high street bank to finance their property purchase. Anything from abandonment risk to loss of residence status makes the mainstream shy away. In fact, very strict internal regulations, as well as regulations dictated by the regulatory bodies, can make funding a property difficult. This applies whether the person is a high net worth individual or a foreign company or organisation.

It’s hard to tell what kind of impact Brexit will have on this market. The face of immigration and emigration is surely going to change. How it affects the property market is yet to be realised. Speculation can and will affect product availability but will not shut it down completely. The property market is here to stay whether it is buoyant or somewhat deflated. All lenders, whether they are private financiers or high street banks, care primarily about two things. The value of the property and the capacity of the borrower to pay the mortgage.


Non-Resident – Non-UK Nationals

Another group that is often forgotten when it comes to offshore mortgages are the non-residents. Non-UK nationals that are also non-resident but have a vested interest in purchasing property in the UK also struggle to find property finance. This may be for an investment or for a longer term plan to eventually settle.

Foreign companies based abroad may also fall into this category. Offshore mortgages are particularly attractive to these groups and they make excellent prospects for private finance lenders.

Because offshore mortgages are a specialist product, it is unwise to try and negotiate the terms yourself. It is a good idea to find an experienced broker that will not only find you the best funding source for your circumstances but will also be able to negotiate the best possible terms.


Seek Advice

Belgravia Property Finance offers advice and access to funding that may otherwise be difficult to find. Access is offered to UK nationals that are resident but non-domiciled. This includes expatriates living abroad. This group includes non-UK nationals and companies living or operating in the UK. Additionally, foreign individuals and companies that neither live nor operate in the UK.

To find out whether you would be able to access alternative property funding, contact the professionals at Belgravia Property Finance to make a confidential enquiry.



High Net Worth Mortgage – What Profits Will It Show On The Home It’s Paying For?

With some conflicting property news out there, it’s a small wonder that the property market appears to be deflating. The news, however, is not all bad, and in fact, some of the doomsayers may even be exaggerating a little.

Climbing the property ladder and obtaining the right mortgage advice has, however, become a little more complicated. This is especially true when looking for a high net worth mortgage targeted at high net worth individuals (HNWI).

Depending on the available figures that you look at will depend on what you read into the current state of the property economy. A report published by Hamptons International indicates that in 2017 92% of homeowners selling their homes made a profit. The question, though, is how much?

The average profit was around £92,000. While that figure may seem staggering, it only paints part of the picture. It is wiser to drill down and have a look at the detail. One in five, that’s an eye-watering 20%, managed to double their money. Whether that’s half a million pounds or ten thousand pounds, double is double. An exceptionally good return however you dress it up.


High Net Worth Mortgage and Profitability

Those seeking out a high net worth mortgage for the high net worth individuals will not be disappointed when looking at the results for the urban areas where this type of property finance for individuals is predominant.

Real profits can be seen at the higher end of the market. This is where high-value properties and mortgages for high net worth individuals play a part. Sellers in London may not have experienced the highest margins, but the higher value properties enjoyed a soaring return nevertheless. Kensington and Chelsea enjoyed the highest gains in the country with an average gain of £940,494. This is slightly down from 2016, but certainly not to be scoffed at.

High-value properties in London are still displaying returns regardless of the predictions of the aforementioned doomsayers. These figures are taken from sellers that have owned their properties for at least nine years. Holding onto your home would seem to be a good idea. These properties were bought around or shortly after the infamous crash of 2007 to 2009. All things considered, that recovery is impressive.

The research covered all of England and Wales, and those in the North-East were the least likely to make a profit, with only 79% doing so. Interestingly though, those in the South-East are more likely to sell their homes for a profit. Moreso than those in London. It may be time for high net worth individuals to have a look at investing a bit further out of town.

Making a profit, however, has not been about simply buying a property. And certainly, for many, it’s not about waiting and then selling it again a few years later. It is clear that those that have made the most profit have made improvements with renovations and extensions.


Negative Equity Is Still Out There

Things are, however, not as rosy for all homeowners. Figures indicate that one in four towns are still suffering from real negative equity problems. There are patches of the country where property values simply have not managed to recover from the 2007-2009 crash. These are not run down impoverished neighbourhoods. The property blackspots are found in popular areas such as Blackpool. Parts of the Lake District are affected too. There are still many properties that are valued well below the prices they were fetching a decade ago.

At the time of seeking out a high net worth mortgage, it is important to consider several factors. Firstly, rather than looking at the property market on average, it is critical that the investor explore how values fluctuated in the last one or two decades. Investigating this in line with economic changes that have been weathered should indicate whether a profit is going to be made in the short, medium, or long term.

When seeking out a high net worth mortgage, make sure that you speak to an experienced and reputable broker. Belgravia Property Finance is experienced at seeking out the best property finance options for high net worth individuals requiring high net worth mortgages.

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