Well that is the end of another week…. Things genuinely seem very positive and trying to focus outside COVID is important for a healthy mind. This week has been a good one for decisive clients going ahead, which seems a long away from where we were a few months ago.

With the impact of 2020 so far, the overseas market has seen it’s options closed down for a while… and that’s not just flights! but products are starting to come back and they are competitively priced.

So what does a Foreign National actually mean?

This means a citizen and resident of another country, without any residential ties to the UK.  The rate will vary depending on whether the client has any UK credit or properties. The type of lender we go to will also vary; for brand new clients we are more likely to have a medium term product, whereas if you have property in the UK already we can go to a more ‘standard’ lender with a term of up to 30 years.

We can also accommodate some top slicing (using outside income) for some products. This can be useful where the rental yield isn’t sufficient, which is usually for higher value properties in the south.

The UK is still a magnet for property investment, although due to travel restrictions it may seem trickier.  SDLT has been loaded now for foreign nationals, but with a low underlying rate it does make the package attractive overall.  We are able to get to 75% loan to value where there is already a UK property and 70% without.  And rates are more competitive than you might think.

What about ex-pats?

Where clients are ex-pats rather than foreign nationals, things can be easier. There is generally a credit footprint in the UK and often a property too. There are more lenders available in this scenario, but we do need to be careful about the lender’s appetite for the deposit source of funds, or the onward use for a refinance.

We have always had a good reputation for keeping these type of cases as straightforward as possible. In our experience it’s about finding the right lender for the case, which is not necessarily the cheapest but as always you need to consider the end purpose. so have a think and give us a call.

I hope you’ve had a good week enjoying our second summer!  This week I am going to tell you about options for when your experience is limited, as this is something we get lots of questions about.  Covid has changed our offering in this regard too so it’s a good update on what is available in the market.

I’m going to answer some of our most common questions, but if there is anything you would like to know that I haven’t answered then let me know.

I don’t own any property and I’m looking to buy a buy to let, what are my options?

This is the most difficult one!  I think the main consideration in this instance is what you are trying to achieve in the long term.  If getting on the property ladder with a buy to let rather than a residential mortgage is the first step to starting your property portfolio then you need to appreciate that its not necessarily going to be the ideal option for your first case.  Once you have owned this property for 12 months though, you will open up so many other options.

If you would be able to afford the mortgage as a residential mortgage, then we have a lender who would look at a buy to let for a straightforward single let property at a competitive rate.  If this isn’t an option, then we do have another lender who would look at it on a 3-5 year term to allow you to get that first step into property.  Rates are not going to be the cheapest so the rental yield needs to be worth it, but the lender is flexible with their affordability calculator and it is a short-term option.  You would need a 30% deposit for this.

This lender will also allow you to purchase an HMO or freehold block of flats (MUFB) as a first-time buyer and investor.  Again, the interest rate is not going to be the most competitive, but the yield you will get when you compare the property to a single let will be much greater.  Again, you will need a 30% deposit and the property will need to be fully managed.

I own my residential property and I want to buy my first investment property; how can I start?

We have a number of options for a single let in this instance. Some lenders have a minimum income requirement so we can discuss this in more detail but we have got some competitive rates for personal and limited company mortgages, and there isn’t really much difference in rate between a first-time investor and someone with experience for single lets.

If you are looking at a small (up to 5 bedroom) HMOs then we have a good option at competitive rates up to 75% loan to value.  You will be looking at a bricks and mortar valuation so be aware of that with your figures.  For anything outside of that, so larger HMOs and MUFBs then we could offer the same as for a first-time buyer and investor.  This would be at 70% loan to value and would need to be fully managed.

I want to borrow my deposit or the refurbishment costs for my first project, will that work?

In short, the lender needs to ensure that they have the right applicants on the application so you need to be bringing something to the deal.  When you have experience then lenders are far more open to bringing in angel investors, but you need to bring the majority of funds or set up an JV so the person that is bringing them is on the application for your first property.

In summary…

We have got some good options for all kinds of property and every level of experience.  The important factor for you to consider is that an increased risk for the lender means a higher rate, so you may well need to compromise on your first property in order to achieve what you want to long term.  There are some great property deals to be had, and if there is sufficient profit then an increased rate for the first few years shouldn’t stop you from buying it.

As always, give us a call if you want to chat through any enquiries you have.

It’s was only a couple of weeks ago that Jackie was giving you an update on commercial funding options, or lack of! but already that seems like a long time ago in the changing world of Covid! This week we have had more positive lender updates on what is available, which with the commercial enquires we are getting, is showing that this is an area that is proving popular.

So here’s an update on what we can do now in a nutshell.  Its always worth a conversation if you have something that falls outside of this though, lenders are happy to go outside of this for the right client and property.  A lot of cases benefit from talking it through, allowing to find another solution.  That’s what we are here for.

Semi commercial

We are seeing some big changes in what lenders are able to offer with semi commercial.  Previously it was based on the residential rental for the property but we are now able to use the commercial rent in some situations.  To use the commercial rental income, the commercial parts must have been trading throughout Covid and have continued to pay rent.  We can then use this income, which makes a massive difference to your maximum borrowing.  We are able to get up to 75% with rates starting at 4.8%.

We are seeing investors increasingly look to semi commercial property to diversify their portfolio. With a fully repairing lease, for usually a minimum of 3 years, it can offer a more profitable area of your portfolio.  We have also seen a complete shift in what is ‘desirable’ in terms of tenant, with take away food outlets becoming far more popular than ever before.  We do have a number of homes for these sorts of commercial units.

Commercial to residential conversions

With property prices seemingly artificially high at the moment, and there still being relatively low stock available, investors are looking for alternative projects which fit as a refurbishment project.  Commercial to residential is a great option for this. The previous problems were commercial without planning; this is an area that we are now able to help with, allowing you to complete on the purchase prior to permitted development or full planning being approved, as long as we have a favourable pre app from the council.   This opens up so many opportunities as you don’t need to buy it cash or try and delay completion, which can often lead to loosing out on the property due to other cash buyers.

We are just about to complete on a property in exactly this scenario and it has been a very straightforward case.  It has shown that with the right lender there is a route of least resistance.

Fully commercial

The door has been latched for a while on this sector – but always knowing it was not locked.

Commercial investment is now available, although capped at 65% loan to value, and there are some caveats but with a good covenant this ceiling may be broken. Caveats: There must be a business in the premises which has continued to trade and pay rent throughout Covid. This lends itself more to light industrial and retail type premises but there will be others that apply.  This is really promising and as business hopefully returns to more normality we will see more opportunities.

Owner occupier is still a difficult area, even on an opco/propco basis.  We will keep you updated on this.

As always we are here and happy to help with any enquiry you have, so please let us know if there’s anything you want to talk through.  Have a great weekend!