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Can Help To Buy Help You?

22 Aug

I was goinghelp to buy free money to start this post differently.

In fact, I was going to write a completely different post altogether.

But I have just used Rightmove’s calculator on how Help to Buy (the mortgage guarantee scheme launching in January 2014) could help buyers.  Having used the calculator I have just one thing to say: FREE MONEY

That’s how this scheme makes home buying look. (more…)

No Money Down Property Deals: Dream On…

20 Mar

I know this post will be popularly unpopular.

BUT

Contrary to what many self-proclaimed “property gurus”, property network meets and exorbitantly priced “teach-me-how-to-buy-property-for-nothing” courses say: property investment requires money.

It doesn’t have to be mega-bucks, but property investment does require SOME money.

The fact is, no matter what anyone says – whether it’s a claimed Lease Option Deal, a No Money Down Deal, or a Below Market Value Deal – to buy any sort of property deal you NEED money.

Money is the lifeblood of ALL property deals.

And I know that’s unpopular: because there is a whole industry built on trying to convince people you don’t need money to invest in property – it’s the “No Money Property Investment World”.

And the fact is, it’s hugely aspirational.  And it’s hugely in demand.

Of course anybody in their right mind would want to own something for nothing which they could make money from.  I mean, how ideal is that – I get to own something for nothing and then make money from that something? Where do I sign?

But the fact is, property cannot be owned for nothing.  Property always costs something – how much of a “something” all depends on your investment criteria and where you want to buy.

But let me ask you a question: if you have no money and are trying to buy property – why are you trying to buy property?

If you don’t have any money to buy property in the first place, how are you going to find the money to maintain it, or fix the problems when they go wrong? And they will go wrong.

Don’t kid yourself.

Properties always go wrong – and I have yet to find a plumber who will accept buttons in return for fixing a temperamental boiler (although I haven’t yet tried that ruse with the electrician).

And you may think the “ideal tenant” who is going to rent your “free” property is going to pay you a shed-load of money on time and keep your head above water.  You may think there is enough net income left over every month for you to squirrel away the surplus and start saving towards your next property purchase (what am I saying, that will be “free” again, of course) but the fact is: sometimes tenants do not pay rent.  It may be for a whole raft of reasons that the tenant is not going to pay rent – but then what?

What are you going to do?

With no money and non-paying tenants how are you going to reclaim your “free” house?

The fact is: solicitors and court cases cost money.  They have not attended the same network meets and “buy-property-for-free-and-everything-will-be-allright” courses.  They have not met the “property guru” who knows how to do everything for free.

Because the truth is: they live in the real world of property investment.

The real world of property investment is a mean, bad, money-grabbing world which most novice investors cannot get their head around.  They do not want to hear the truth of “property investment requires real money to invest”.  Content with living a lie, these novice investors would rather attend a network meet, course or buy a book and be told how they can buy property for nothing.  How they can buy property for less than a can of Tesco Value Baked Beans.

They do not want the harsh reality that property investment actually requires REAL money.

Because that is not the dream of property investment.

Well, now it is time to wake up.  Get real.

If you want to invest in property, get some money.  It doesn’t have to be much.  But you do need a few grand to start with.

Only then, when you have actually got some money in the bank can you start thinking about investing in property.

Until then – enjoy your dream of buying property for nothing – coz that’s all it is.

 

Raising Finance For A Property Auction Purchase

13 Mar

Raising finance to buy property at auction is a never ending nightmare.  To be blunt, it’s the reason why most people do NOT buy at auction.

If you successfully bid on the day you give a 10% deposit and exchange contracts.  Then 28 days later (sometimes 14 days) you have to come up with the rest of the dosh.

Which is where the lender comes in – as they are providing some of that “rest of dosh” to pay for the property sale completion.

raising finance for auction property

In theory, this should be quite straightforward. In theory.

To be honest 28 days (in my mind) is plenty of time for the valuer to visit the property and report back to the lender if the property is suitable security.  The solicitor then needs to do his various checks and bits and bobs (I am not a qualified solicitor so although I don’t really understand their various paper shuffling exercises, I do know it’s EXTREMELY important).  And then he in turn also reports to the lender.  And then the offer gets sent, gets accepted and funds are released.  In this age of instant banking, funds can be sent the same day.

In this day of “the internet” emails, reports and any sort of documentation can be sent instantly.

But for some reason everything takes a l-o-n-g time.

Which is why, if you are looking to buy a property at auction, and you need to raise finance, it is always best to have an application for finance (and preferably an offer) before you bid.

Because the fact is, for some unknown reason, valuers, banks and solicitors seem to do a whole load of unseen-yet-important-paper-shuffling-stuff before you get your monies released.

That means anything which may add to this, needs to be done beforehand so you do not add any more to the “unseen yet incredibly important paper shuffling” because otherwise you will most likely blow your chances of completing on time.

If you are thinking of buying property at auction and want to raise finance for the purchase – my advice: speak to a broker beforehand.  Submit a provisional application and get indicative terms of business and willingness to lend.  Where possible, it’s best practice (although will cost you more) submit a full application and get the property valued before auction and a mortgage offer in hand.

That way when you bid, you know you have the money to buy and the best chance of auction success!

 

 

 

Why there is no security in your mortgage lender’s Standard Variable Rate (SVR)

8 Mar

So for the past few days I have watched as bank upon bank announce they are increasing their Standard Variable Rates (SVRs). And with every new lender hiking their prices I check my products and wait with baited breath.  Of course, it was only a matter of time before all the banks jumped on the band wagon…

There may be moral indignation and hatred in the popular press – but these are banks – they don’t really give a rat’s arse about anything more than making money.

We are all grown ups, and following this banking crisis, we really should know better by now.

But we don’t.

Last week I shared with you how the 25 year mortgage contract I signed with Skipton which had a ‘rate guarantee’ meant nothing in the face of the “exceptional circumstances” clause, which is a catch all, for this-clause-means-we-will-do-what-the-F-we-want. Unfair contracts. Misleading guarantees. Outright liars – you would have thought Watchdog and all the other consumer action groups would have a field day – but they don’t, because they can’t do anything.

And so today I wake up to the news that my Bank Of Ireland mortgage rate which is currently on a Standard Variable Rate (SVR) is going to increase by 1.5%. It was a shock. Even for me.

Generally SVR’s, although independent of Bank Of England Base rate, do usually follow the pattern of base rate changes. Yes, the SVR is the mortgage lender’s own rate for lending, but usually it does have some sort of semblance to Base Rate.  But now we’re worlds apart. This is again a case of the banks doing what the F they like and screw anyone else.

So Halifax started the ball rolling last weekend with it’s 0.25% hike, then a few others started piling in – all with approximate 0.25% increases. Then Bank Of Ireland who saw the media furore which had started to erupt, just said “F*** IT” why not just get it over and done with and screw our customers royally.  Let’s jack it up by 1.5%.

Just to put that into a real world context for you, my mortgage with this new increase will rise by £196 per month…and that’s without the base rate moving…which we all know is going to happen at some point soon.

Of course, most banks would probably not act like Bank of Ireland, they don’t really want to lose all their customers.

However, that does not apply to Bank Of Ireland.

Having spoken with Bank of Ireland this morning to find out my options for other mortgage products (limited – I can fix for 3 years or 5 years at 5.99% or 6.25% respectively) I was politely informed:

“We do not make a secret of it; Bank Of Ireland do not want to be in the mortgage business any longer. We stopped taking on new customers 3 years ago. Now we are looking to offload our business.  In the nicest possible way, we are not looking to encourage our customers to stay with us. We want them to seek other options elsewhere which is why we have paired up with London & Country Mortgage Brokers and they will find you a more competitive rate with another lender”

There is truly no better way than saying Fuck Off.

Truly that is she told me.

So the banks have changed their minds. They no longer want to lend the money they offered to consumers.  I understand businesses change course. But really, is it fair for a bank to just change it’s mind when hundreds of thousands of people and their homes are involved?

Is it OK to just say – we don’t want you business – take it elsewhere.  Property is the most expensive purchase of your life and it takes years to pay back the debt.  It is not an overnight decision. Well not for me anyway, but then I am not a bank.

Again, I have limited choice. The mortgage market is screwed.  And on top of all this, there are the extortionate arrangement fees of the new mortgage which are typically in excess of £2,000.

Maybe I should know better. I wonder why I am so surprised. But do you know what? I am.

Property is a long term investment.  It would be nice to feel that we have that long term security with the banks we deal with.

What Does A Mortgage Contract Really Mean?

1 Mar

Today is a bitter day.  Today I have lost my battle against Skipton Building Society.

It is true; I was warned. Banks can do what the F they like regardless of any contract that you sign. It means jack all if they decide they don’t want to honour it.

Fairness? Roll over. That doesn’t exist.

So what happened?

Well you may remember I wrote about it here – it was a letter I received out of the blue from Skipton which essentially would change the key borrowing terms of my 25 year mortgage I had taken on an investment property.

The nuts and bolts were – after the 5 year fixed period had elapsed, rather than a ceiling of 3% above base being applied (as my contract clearly stated) Skipton decided to change the terms due to “exceptional circumstances” and charge what they felt like/ how much they wanted/ how much they needed to fill their coffers.  The rate they decided to charge me was 4.95% – some 1.45% ABOVE the agreed contract rate.

I argued. I ranted. I raved. I sent long letters. I sought out case laws. I contacted a consumer pressure group for a legal class action (details kindly provided by Nick P in his comments on my original blog).

I tried every which way.

I got nowhere.

So I went to the Ombudsman.  This could not be fair. How can it be that a bank decides because market conditions no longer suit them they can just change a 25 year contract?

Well they can. And so the Ombudsman letter tells me – it’s also fair.

And apparently the FSA also agree that what Skipton has done is fair. How is it fair for Skipton to renege on a key contract clause?

Apparently it’s fair because Skipton:

a) Informed it’s customers of it’s decision to breach the mortgage contract

b) Gave customers the “choice” that if they didn’t like this breach then they could leave.

That’s it – you got it, apparently the Skipton’s response “which resulted in a fair outcome for consumers” was the reponse:

If you don’t like it, FUCK OFF

Well, that would be great if I had a choice; I would leave.

But, the mortgage market is a mess. Nobody wants to lend.

So I had no choice, I had to stay with Skipton. For the privilege I also got to pay another 2% arrangement fee for my remortgage (which they were generously allowing me to do).  It wouldn’t feel so big a deal if this was just one property…but there were several.

In “fairness”, Skipton has made a killing out of me – it’s just added £1000s of pounds to every mortgage in arrangement fees and added more to the amount I owe at the end.  Of course, why shouldn’t I feel that is “fair” as the Ombudsman, FSA and Skipton tell me.

But then I am just the muppet who thought that a mortgage contract was a legal document and meant something. More fool me.