BUYING PROPERTY AT BELOW MARKET VALUE ADVICE FROM LETTINGFOCUS.COM
Back in 2008 as base rates fell, many lenders failed to pass on the Bank of England’s cuts in a desperate bid to improve balance sheets.
Six years later and lenders margins over base rate still remain high which means many people cannot re-mortgage onto better rates once their current mortgage deal ends.
Beset by falling flat prices and sluggish rents on oversupplied city centre flats, most lenders are reining back or exiting entirely from making loans on new or recently built city centre flats.
They know that buying property cheaply often comes down to buying from someone who is facing one or more of the three Ds death, debt and divorce.
At the same time you would apply for a remortgage supported by a valuation for £300,000 on which you applied for a mortgage loan of 85% or £255,000. This scenario would give instant equity plus a bit extra which could go towards purchase costs and the cost of the bridging loan (which would be at least 1.5% interest per month on top of a set up fee.)
So today all mortgage lenders will want to see 6 months ownership of a property before they will consider offering a re-mortgage.
Indeed, those who sell seminars on how to do BMV say they have some Baldrick Like " cunning schemes" in place though it is too early to evaluate these yet.
The latest kid on the block is the so called Property Lease Option. We expect many would-be tenant-buyers to lose their shirts on some variants of these. (Around the year 2012 you started to read about them in the papers!)
But away from the "all too clever schemes" for other more ethical property investors with a cash pile available to help finance buying property these hard times are also potentially great times.
People will always need to sell fast for a variety of reasons often because of sickness combined with consumer debt. And it seems more and more people are getting overcome with debt but want to stay in their own home.
SALE AND RENT BACK
However, these Sale and Rent Back or SARB deals offered sellers no long term security and have finally had their day because the government has now (rightly) imposed stricter controls on the way such business is conducted making it all but impossible for small operators to function in the future.
As time goes by, there will always be lots of new "get rich quick" ideas being floated around in what is essentially an unregulated market place.
The very latest ideas involve "joint venturing" and so called "Rent to Rent" schemes. We advise on such schemes - the pro and the cons, as part of our one to one advice service.
ABOUT LETTING FOCUS
At LettingFocus.com we work mostly with organisations who sell products and services to the private rented sector - giving them consultancy advice to help them improve what they do. See our Home Page for more information.
We also provide advice to landlords too. Private landlords may find the following pages useful. ....
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