Latest news

Customer achieves £40,000 equity growth with Precise Mortgages’ Refurbishment Buy to Let

11 January 2019

A property investor has achieved net equity growth of nearly £40,000 in just two months using Precise Mortgages’ groundbreaking new Refurbishment Buy to Let proposition.

Both elements of the case were packaged by 3mc. After the Decision in Principle (DIP) was received, Precise Mortgages completed on the bridging finance element of the case in just nine working days which enabled the customer to purchase the property at auction. Once refurbishment work had been carried out, the property was revalued at more than £300,000. The time taken from initial DIP to completion of the buy to let loan was just eight weeks, including the Christmas and New Year period.

Refurbishment Buy to Let offers customers the best of both worlds when financing a refurbishment project – quick access to flexible short-term finance which enables a property to be purchased at auction and refurbished before the peace of mind and security of an exit onto a long-term mortgage once the work has been completed. Landlords can borrow up to 75% LTV on the bridge and 80% of the post-works valuation on the buy to let mortgage.

Brokers benefit from a streamlined application process which includes a range of great features, including one application form which produces two offers and two procuration fees (one for the bridge and one for the buy to let). They also receive support from a dedicated team of expert underwriters who provide help every step of the way. Bridging rates start from just 0.49% and no mortgage repayments are required whilst the refurbishment works are being completed.

With landlords looking for different ways of boosting their profits and increasing rental yields and capital values, it is suitable for a range of landlord types, including personal ownership, limited company and HMO applicants. Interest Coverage Ratio options are available to ensure brokers can tailor affordability assessments to customers’ personal circumstances.

Alan Cleary, Managing Director at Precise Mortgages, said: “Landlords have traditionally faced difficulty in securing finance to refurbish a property before letting it out: this product enables them to do so. It allows them to purchase an under value property without having to be a cash buyer and to use the equity growth to invest in future projects should they wish to do so.”

Doug Hall, Managing Director at 3mc, added: “This was great service from Precise Mortgages, assisting 3mc to complete both parts of their new Refurbishment Buy to Let range.

“You don’t often see products coming together in the specialist lending market, so I love the fact that Precise Mortgages has been bold enough to bring Bridging Finance and Buy to Let Mortgages together.”

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B is for broker, not Brexit

09 January 2019

Alan Cleary - Managing Director of Precise Mortgages

If 2018 was characterised by one word, it was Brexit. 2019 looks set to be dominated by Britain’s exit (or not) from the European Union too.

But I think we should reclaim the B-word and start focusing on what comes next. So on that basis, my B-word for this year is broker.

At Precise Mortgages, we’ve always supported intermediaries – it’s our view that brokers are fundamental to the success of our business. In large part this boils down to distribution, but it’s not just about that. We strongly believe that advice is key to good lending.

There are a number of reasons for this but paramount is the fact that advice means good borrowing, and if a loan is affordable for the borrower, it stacks up for the lender.

While the Mortgage Market Review made affordability intrinsic in the assessment of a mortgage application, it also provided for the role of advice in that application. And never has this been more important in our view.

Brexit has created a huge amount of uncertainty for government, regulators, businesses and individuals alike. And planning for that uncertainty is nigh on impossible – as everyone keeps saying. But life goes on regardless and it’s here that advisers are so valuable to businesses and individuals.

Good financial advice has always accounted for uncertainty because, let’s face it, no-one can predict the future. It’s why lenders stress-test affordability and why anyone investing their money in property or any other asset is constantly reminded that values can go down as well as up.

The key is that the advice makes reasonable sense given the information available. And for those buying property or remortgaging an existing home or buy-to-let that means being able to afford the repayments for the foreseeable future.

Whatever happens, there’s already been a huge uptick in the number of borrowers choosing to lock in their mortgage rate now. Data from Experian shows that 89% of mortgage shoppers looked at fixed-term deals in December, up from 85% in November and 83% in October. By stark contrast, interest in tracker mortgages accounted for just 6% of searches in the last three months of 2018.

Fixed rates have always been a popular choice for first-time buyers, unused to uncertainty about their financial outgoings. Clearly, the ongoing political drama, together with repeated warnings of a rising base rate, has prompted advisers to recommend that those further up the ladder also create a bit of financial certainty for themselves at a time when so much else is up in the air. This is sensible advice, especially when mortgage rates are so low.

Last year saw margins on residential lending squeezed at all loan-to-values and it’s unlikely that such pressure will continue throughout the next 12 months.

So while 2019 is likely to have some ups and downs, we are expecting it to be one full of opportunity for brokers. They have always thrived in uncertain times because good advice is good advice, no matter what happens politically.

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Deals offering best returns require forethought and up-front investment

03 January 2019

Alan Cleary - Managing Director of Precise Mortgages

Brokers are a resilient bunch and can usually find ways of getting through lean times when they arrive. The specific approach will vary depending on a broker's experience, expertise and the network they may belong to. It could be that a quieter quarter makes time for that back-book contact strategy that never quite hits the top of the priority list. It might be time to revisit protection sales for those buyers who didn't consider life cover fundamental two years ago, but have since had children and would now really understand its value.

One area that I think offers brokers considerable opportunity is in buy-to-let, a sector that is now fraught with complexity. Not only can intermediaries offer invaluable advice to clients unsure of what to do with their existing portfolios, there's also some interesting innovation out there that can support clients looking to invest in buy to let today. There are an increasing number of products out there that cater to this type of scenario – and I’m absolutely not talking about ‘flexing’ criteria. No.

Instead, I'm talking about helping clients to understand how to add value to a deal over time in order to create a property that does fit lenders' criteria. Increasingly, it's not enough to buy a property with a buy to let mortgage, give it a lick of paint and expect a decent yield. The deals that we see that offer landlords returns worth having require a bit more forethought and some investment up front to add capital value and maximise rental incomes.

Until very recently, funding this was a trickier business than applying for a buy to let loan and would typically require a short-term loan alongside the buy to let. It could have been seen as a lot of work for a broker not used to bridging, especially when there was a steady stream of first-time buyer enquiries filling up the diary.

Now, it's possible to do this type of deal in one application; we launched our refurbishment buy to let because of precisely this challenge. In a market where the bread and butter deals are fewer and further between, and where clients have to be smarter to stay in the profit-making game, it can really pay for brokers to take another look at those areas that sit beside your usual remit.

At a time when the majority of news surrounding this market is subdued at best, it could allow you to give your clients something to really smile about.

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Mortgage market still looking strong and stable

18 December 2018

Alan Cleary - Managing Director of Precise Mortgages

What a shambles. Far from the gentle wind down to Christmas, the end to 2018 has been, frankly, chaotic.

The political situation is still up in the air and rather than getting anywhere closer to some sort of resolution on the Brexit debacle, it feels as though every day throws yet another spanner into the works.

We've seen not just one but two occasions where the Prime Minister has been held in contempt of Parliament, refusing to publish the legal advice on her Brexit deal and then pulling her vote on it without reference to ministers because she knew she'd lose.

She survived a vote of no confidence and then went back to ask Europe to reconsider the Northern Irish backstop.

She was sent home and still looks set to lose the vote she would have lost had she held it. Britain's credibility on the international political stage looks, at best, shaky.

So it's very reassuring that the British public seem pretty unfazed. They are getting on with life.

Admittedly, 2018 was challenging for the high street and house prices are definitely softening in London and the south east, but it's really not that bad out there economically speaking.

The mortgage market is looking pretty healthy considering. The latest figures from UK Finance1 showed a quieter than usual September with lending down year on year across the board.

New first-time buyer mortgages completed in the month fell by 4.5 per cent on the same month a year earlier. Home mover mortgages completed in the month were also down, by 8.4 per cent. Buy-to-let purchase was down 18.8 per cent and remortgage on both residential and buy-to-let was pretty flat.

At the start of Q4 it did feel like the market was a bit spooked by Brexit and September did see transactions stall. But things had picked up by the end of the year, perhaps by more than is usual for this time of year.

October’s figures were much stronger with remortgage up 23.2 per cent on the same month a year earlier. First-time buyer mortgages also bounced back, up 8.2 per cent on the same month a year earlier while home mover mortgages completed in the month were 4 per cent higher on the previous year.

Brokers have a healthy pipeline going into the New Year, transactions are steady and price inflation slowing down isn't actually all that bad. Improving affordability in a market that has been stretched to its limit for years will be music to would-be homeowners' ears.

2019 is likely to be another eventful year, and it would be helpful if the government could put Brexit to bed once and for all.

However, as far as the mortgage market goes, I think 2019 will be fairly steady.

People are still having children, getting married, divorcing and dying, and that means houses are being bought and sold. The anticipated base rate rises should support healthy remortgage levels in the residential market next year, while in buy-to-let, portfolio rebalancing will continue to be the dominant theme.

This backdrop is important for those specialising in the short-term side of things too - the health of both the residential and buy-to-let markets is paramount to maintaining the flow of exit options for developers using bridging to fund refurbs.

While government and the political situation in this country may be anything but, at least the mortgage market is looking strong and stable going into the New Year.

Source: 1https://www.ukfinance.org.uk/mortgage-market-softens-following-period-of-strong-growth/

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Buy to let specialists are thriving

29 November 2018

Figures recently included in the latest Mortgage Market Tracker1 from the Intermediary Mortgage Lenders Association suggest brokers saw the largest drop in business volumes in the third quarter of 2018 than they’ve experienced in more than two years.

Alan Cleary - Managing Director of Precise Mortgages

This hasn’t been our experience in 2018 at all, which is most likely down to us deliberately taking a strategic approach to our positioning. Even in a market where buyers, movers and developers are choosing to sit on their hands, we’ve concentrated on areas of the market where we know we can add significant value.

There are a number of trends that have affected the shape of lending in 2018, the most significant being the impact of changes in taxation and affordability testing in the buy to let market. The reduction in tax relief on buy to let mortgage interest and the tougher stress-testing rules from the Prudential Regulation Authority are beginning to have a visible effect on lending trends. Limited company buy to let has been a big win for us this year, as has our commitment to offering flexible affordability criteria to landlords with other sources of income.

Adding value to investment properties at the outset has also been a focus for landlords increasingly this year. We’ve helped landlords by adapting our application processes for short-term bridge to let and launching our new Refurbishment Buy to Let proposition which features a double proc fee and single application. We believe this demonstrates both our commitment as a lender to supporting our borrowers and introducers, and also illustrates the value that a specialist lender can offer in today’s market.

Buy to let remortgaging has been a significant part of the market this year, and that's not accounting for product transfers in buy-to-let. The big high street lenders have necessarily had to focus on retention in 2018 as margin pressures have got tougher and transaction volumes have remained subdued.

That has opened up an opportunity for specialist lenders to plug the gaps created by these shifts. We're big enough to make a meaningful difference to the supply of specialist buy to let finance and nimble enough to be able to flex our criteria and underwriting to adapt to the needs of borrowers in a changing market.

What’s in store for 2019? Well, that remains to be seen. But I suspect that it will be a year in which smaller specialists continue to thrive. And, rest assured, that we will remain committed to supporting brokers and borrowers whose needs are not being met on a high street increasingly under pressure.

Source: 1https://www.thisismoney.co.uk/money/mortgageshome/article-6429325/Mortgage-lenders-offer-bargain-deals-Brexit-winter-worries-weigh-housing.html

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