NO MONEY DOWN DEALS AND BELOW MARKET VALUE, BMV THREATENED says LAWRENSON OF LETTINGFOCUS.COM
Another casualty of the credit crunch is the “NO Money Down BELOW MARKET VALUE Deals.
I have written about how this works before but in essence how it works is that you buy a property at say 20% below market value from a motivated or distressed seller using a bridging loan and get a remortgage next day for the full market value.
That way you can buy the property with No Money Down.
The problem is that the only mortgage lender prepared to do these types of deals, the Mortgage Express, has I hear, pulled out of doing this business.
No doubt they have been spooked by the credit crunch and the fact that such deals look ever more risky as long as property prices remain shaky.
Also, lenders must have got increasingly nervous about the rental income potential from “sellers turned tenants” on the sale and rent back version of these deals (as that person will by definition probably have some history of not paying their financial obligations)
In the light of the banks new found timidity to lend, Mortgage Express would recently have also become scared of the fact that so many novices (and hence inexperienced landlord investors) were so keen to get in on this kind of deal. This is not surprising as these routes to wealth are heavily promoted at trade shows.
But I understand from one experienced Below Market Value Operator that the doors are also now closed to experienced BMV players too.
According to my contact, this now means the only way to proceed is to hold the property for 6 months on a bridging loan and then re-mortgage. And that ain’t cheap!
It is a shame because Buying Below Market Value or BMV using a bridging loan has it merits.
I will be interested to see what the promoters of seminars on BMV at the Property Investor Show in Manchester next week make of all this and how they will proceed.
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson a property expert from lettingfocus.com.
I’m the author of “Successful Property Letting - How to Make Money in Buy to Let” the UK’s top selling property title buy the UK's top selling buy to let book
It is fully up to date with all the recent changes to tenancy deposit schemes, HMOs, licensing, capital gains taxes and it has new sections on buying property below market value. I’m an expert public speaker on property and a well known property investment blogger and I contribute to newspapers and a host of property websites, write a property investment blog, a number of columns in the press and I can provide advice for landlords
I also work as a consultant helping banks, building societies, housing associations and web portals with their buy to let and property products and services and am a regular speaker at property shows.
You can read more of my blog & find details of my networking, advice, property investors networking programme at my website.What’s unique about lettingfocus.com is that we offer independent property coaching because unlike most people in the buy to let and property “advice” business we are not linked to a property company, a developer, an agent or bridging loan financier and do not receive commissions from any of these sources.If a property investment is lousy – We’ll tell you straight and we will tell you all about buy to let and property investment - the good and the bad and we won’t make silly promises that you’ll become a millionaire overnight.
Copyright: David Lawrenson 2008. This blog is updated once a week. Permission must be sought before using the material in the blog.
I have written about how this works before but in essence how it works is that you buy a property at say 20% below market value from a motivated or distressed seller using a bridging loan and get a remortgage next day for the full market value.
That way you can buy the property with No Money Down.
The problem is that the only mortgage lender prepared to do these types of deals, the Mortgage Express, has I hear, pulled out of doing this business.
No doubt they have been spooked by the credit crunch and the fact that such deals look ever more risky as long as property prices remain shaky.
Also, lenders must have got increasingly nervous about the rental income potential from “sellers turned tenants” on the sale and rent back version of these deals (as that person will by definition probably have some history of not paying their financial obligations)
In the light of the banks new found timidity to lend, Mortgage Express would recently have also become scared of the fact that so many novices (and hence inexperienced landlord investors) were so keen to get in on this kind of deal. This is not surprising as these routes to wealth are heavily promoted at trade shows.
But I understand from one experienced Below Market Value Operator that the doors are also now closed to experienced BMV players too.
According to my contact, this now means the only way to proceed is to hold the property for 6 months on a bridging loan and then re-mortgage. And that ain’t cheap!
It is a shame because Buying Below Market Value or BMV using a bridging loan has it merits.
I will be interested to see what the promoters of seminars on BMV at the Property Investor Show in Manchester next week make of all this and how they will proceed.
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson a property expert from lettingfocus.com.
I’m the author of “Successful Property Letting - How to Make Money in Buy to Let” the UK’s top selling property title buy the UK's top selling buy to let book
It is fully up to date with all the recent changes to tenancy deposit schemes, HMOs, licensing, capital gains taxes and it has new sections on buying property below market value. I’m an expert public speaker on property and a well known property investment blogger and I contribute to newspapers and a host of property websites, write a property investment blog, a number of columns in the press and I can provide advice for landlords
I also work as a consultant helping banks, building societies, housing associations and web portals with their buy to let and property products and services and am a regular speaker at property shows.
You can read more of my blog & find details of my networking, advice, property investors networking programme at my website.What’s unique about lettingfocus.com is that we offer independent property coaching because unlike most people in the buy to let and property “advice” business we are not linked to a property company, a developer, an agent or bridging loan financier and do not receive commissions from any of these sources.If a property investment is lousy – We’ll tell you straight and we will tell you all about buy to let and property investment - the good and the bad and we won’t make silly promises that you’ll become a millionaire overnight.
Copyright: David Lawrenson 2008. This blog is updated once a week. Permission must be sought before using the material in the blog.
Labels: Below Market Value, Below market value property, BMV, buying property cheaply, NMD, No Money Down
This entry was posted by lettingfocus, on
Thursday, May 01, 2008.
