property investors network

Is your mortgage broker a liability?

I am consistently amazed by the number of so called professionals in our industry who don’t know what they are doing. Last weekend I was speaking at the Homebuyer Show at ExCel in London, where I was asked to share my views on the topic of ethics in relation to buying property below market value from motivated sellers. At the end of my presentation I opened up the floor to questions and I was asked “What would happen now that Mortgage Express had pulled their same day re-mortgages?”
This is typical of misinformation spread by people who do not know what they are talking about. The investor who asked the question was merely passing on information they had been told by their mortgage broker. Mortgage Express (MX) are the main lender we use when buying a property BMV for cash and then re-mortgaging the same day, to pay back the bridging, cover the purchase costs and sometimes even pull out some cash from a property purchase. MX are most certainly still doing this as I am doing deals every week. However, the mortgage market is changing daily. Some lenders are no longer lending on new build properties, some are reducing their Loan To Value ratios, and some lenders who were happy doing same day re-mortgages are no longer allowing it. MX at the moment are still doing it and there are a few others who will do it, if your mortgage broker knows how to deal with it correctly. This is where you need an excellent mortgage broker.

After my presentation three guys came up to me and asked me what I would do when MX do pull their product. They said that there were mortgage brokers and it turned out that they had purchased 40 BMV properties between them so they were fairly confident that they knew what they were doing. I explained to them a more advanced strategy that we teach on my Property Mastermind Programme but they seemed to think it was not possible. I know this certain strategy works as I have done it before and I am doing it again next week. Although they know a lot about the market, these mortgage brokers did not know as much as the brokers I use. There were actually quite argumentative, insisting that what I was saying would not work. I suggested they come and speak to one of my mortgage brokers who is on my Property Mastermind Programme and happened to be on my stand at the exhibition. After about 20 minutes talking to one of my mortgage brokers they left, all smiles and happy as they now knew of 2 more lenders who would do same day re-mortgages for them. Just goes to show, no matter how much you know, you can always learn more if only you are open to it.

Please make sure the people that you use as your Power Team actually know what they are doing so they can best represent you and give you what you need.

Will mortgage express always provide this type of same day re-mortgage? Who knows but currently they have a massive share of the market and I can’t really see them wanting to give that up. I believe that they may change their criteria. They may only allow experienced investors who already have several buy to let mortgages to use this facility which will block out the amateur investors.

6 thoughts on “Is your mortgage broker a liability?

  1. Homesearcher

    I have told the same thing by three different brokers, so how do you get to convince your broker that it is still available ?????

  2. Kasim

    Maybe the three brokers were directors of Mortgage Express looking for other lenders who still do same-day bridging. MX have pulled out of this market despite their large share of it.

    This is worrying because, if they think it’s too risky, then we should tread with care. Maybe MX have got their fingers burnt with this strategy.

  3. Simon Zutshi

    Hi Kasim,

    I believe the reason that MX have now stopped doing back to backs is because they do not need the business. A few lenders have pulled out of the Buy to Let market which menas that the remaining lenders have been very busy with all the increased workload. This has resulted in all of the lenders increasing the rates they charge just to put investors off and slow down the workload. A few lenders have shut their doors to new busniess until they clear the backlog. Ofcourse none of the lenders want to run out of money like Northern Rock.

    I still maintain that the professional investers amoungst us will always find a way to finance their properties whilst the amateures will step out of the market maybe for a year or two. This means that there is more opportunity for us as there will be increasing numbers of motivated sellers who need to sell their properties.

  4. paul

    Which companies are still doing the back to back remortgage, if no comapnies are then what is the “new method” of financing the deal?

  5. mimi

    The Bridging Store are very helpful now that MX have finally pulled the 1 day remortgage (aka closed/daylight bridge). They have a (perfectly legal) way of getting around this, and so are still able to assist in No Money Down dealing for BMV properties. The simple explanation of how this works is on their website (www.thebridgingstore.com). As Simon mentions, even when they make these things more difficult there will always be a way around it as true investors (not to mention bridging/creative finance firms) have a strong incentive to find one. You do however need to be working with a solicitor and broker who are familiar with these practises and do these type of deals regularly – otherwise they will be quick to tell you it can’t be done! The good news is that the packagers usually work with a recommended firm that understand the scenario and can move quickly (and legally!).