Lender Focus – commercial and HMO mortgage lender Interbay

Interbay provide an excellent alternative source of funds for Commercial, HMO and BTL mortgages. In some parts of the UK where the property and land values are higher, Interbay require just 110% rental cover which means that an experienced investor can potentially leverage more borrowing against a property generating rental income than they could with some alternative commercial lenders such as Shawbrook or Aldermore.

Interbay do offer interest only mortgages where the term of the loan is 10 years or less and on a repayment basis the loan term can be as much as 30 years depending on the age of the investor. Furthermore, where an investor is refurbishing a property and looking to refinance within 6 months of purchase, Interbay will allow a remortgage inside of the 6 months.

The video above shows a brief commercial mortgage update delivered to professional property investors at the Cardiff pin meeting (Property Investors Network). To find out more about Cardiff pin, go to www.cardiffpin.co.uk


Lloyds Commercial – Lender Focus brought to you by Harvey Bowes Mortgage and Finance Brokers

Lloyds Commercial have an appetite for a wide range of commercial propositions. From lending on holiday homes and HMO’s to business lending and owner occupied commercial premises, there is certainly a plethora of interesting commercial mortgage products.

Something unusual in the current lending arena is that Lloyds Commercial will offer up to a 20 year fixed rate on commercial mortgage products. The advantage of this to an investor is stability throughout the term, although a disadvantage may be that the overall cost is therefore higher than a variable rate alternative of some kind, such as a discount, base rate or LIBOR tracker.

The lender will lend up to a borrowers 74th birthday at the end of the mortgage term and a maximum term of 25 years. Interest only mortgages are not currently available, however, the length of term and competitive rates mean that a property investment, such as a rental property or HMO may still cash flow well and there is the advantage of the fact that on a repayment basis, the balance owed to the bank is reducing over time.

Furthermore, with no 6 month CML guideline to restrict remortgages applying (Also known as the 6 month rule), it is possible to buy a property in cash or with a quick short term loan and not have to wait 6 months before re-financing with Lloyds Commercial.

The Lloyds commercial mortgage products also the flexibility of no Early Repayment Charge (ERC) and therefore if an investor wants the opportunity to flip or hold, this is again an ideal way to utilise competitive bank funding while having the option to choose to settle early without further pecuniary charge.

With an increasing number of first time landlords coming into the market place, another key element of Lloyds criteria is that they will consider first time HMO landlords. This is an area where many other lenders, including some of the flexible challenging banks do want experience as a landlord/investor before accepting HMO mortgage applications. Lloyds will consider first time landlords for HMO mortgages provided the proposition as a whole is robust. It certainly helps if the landlord can demonstrate that they have run or managed another type of business, or invested in their education of being landlord and running a multi-let or HMO property.

To find out more about Lloyds Commercial, or any other commercial lending, contact the team at Harvey Bowes today on 029 2175 4150.

Lender Focus – Cambridge and Counties

As a challenging bank active in the commercial mortgage market, Cambridge and Counties Bank is certainly making an impression. Perhaps a more unusual partnership, the bank has been established as a consortium between Trinity Hall College, Cambridge University and Cambridge County Council Pension Fund.

They will consider up to 70% loan to value with a minimum loan of £50,000 and maximum of £5m. There are short term and bridging loan options as well as long term products. On residential investments, such as Buy to Let and HMO properties they will consider lending on an interest only basis which will facilitate better cash flow on a monthly basis or of course repayment which will mean the balance of the loan will be reducing over the mortgage term.

Cambridge and Counties Bank, or CCB, say they are committed to working together to provide straightforward, no-nonsense products that will help small to medium sized businesses and property investors reach their full potential. With a proposition for owner occupied commercial property and commercial investment, as well as residential investment property mortgages, the bank have a well rounded approach to lending in this arena.

The bank also have a flexible approach to an investor/borrowers credit profile. Understanding that the odd wrinkle might not be a true reflection of how an investor will conduct themselves moving forwards. This is of course purely for underwriter discretion and the overall proposal must be robust. However, this flexible approach to underwriting is certainly popular among the property investor network throughout the UK. Especially with the adaptable approach to HMO mortgages and the large upsurge in investors looking for HMO loans to move with current rental demand.

The bank also lend to SIPP and SSAS schemes. This area of the market is set to grow substantially in the coming years and therefore having a bank to lend and a broker who understand this type of proposition can maximise the potential of any pension based leveraging. The liaison required to move such a project forward will also potentially involve pension administrators, your IFA and pension members. Therefore having a broker and bank that understand how to position such a proposal and management the progress is critical to success.

To find out more about Cambridge and Counties Bank, or to find out more about Harvey Bowes Limited and our commercial mortgages and finance, please contact Ben Hollingsworth on 029 2175 4150.

Landlords – basic tips on collecting rent arrears

Historically, December and January are known as months where landlords face a greater risk of tenants falling into arrears. And if a landlord has leveraged a mortgage against their investment properties, then the monthly mortgage commitment must be paid even if the tenant fails to pay the landlord.

How does one minimise the risk of their tenants falling into rent arrears?

Firstly, reference your tenants carefully before allowing them to move into your property. In many circumstances when a tenant is looking to move, their current landlord may want to give a reference that increases the chance they will be able to move on rather than an accurate reflection of the tenant to landlord relationship. When referencing therefore, it is good practice to contact the previous landlord to the current one. As they are much more likely to give a true reference. It may also be useful to seek references verbally. A sensible landlord will protect their own interests and may not put something in writing they would otherwise like to say.

Make a credit check part of the referencing process, although historical poor credit may not be a true picture of how a potential tenant is currently handling their income and expenditure. If therefore the score comes back low, ask the prospective tenant to provide you with an Experian or Equifax report. Once you see this, have a look at how endebted the tenant is. And look for rows of ‘zeros’ on the credit profile for each account. If you see a number ‘1’ this means the account is one month down. Likewise you may see a ‘2’ or frankly even ‘6’. The last 24 months are normally shown.

It is always wise to obtain an employment reference as well. Check the tenant is employed by who they say they are. Don’t just take a payslip as proof. You can ask the tenant to sign a letter of authority and then contact the company. Make sure you ask if they are currently on probation or if the company has anyone on notice of potential redundancy. On its own, this information does not tell you the potential tenant will be trouble, but it does help to build a picture so that you can make an informed decision.

Bank statements, usually the last 6 months are being asked for as part of referencing. Again, does the current rent get paid on time each month. Is it collected by direct debit, standing order etc or is it sent adhock? You can also see if the tenant defaults on other commitments, incurs bank charges due to poor management or goes over their overdraft limits.

Just recently, I vetted a tenant to find they had regular transfers to Gibralter along with the same reference each month. This looked like a standard business transaction, but upon googling the reference, I found it to be a online gambling company. Sometimes up to £6,000 in a month was being transferred, and the amount coming back was far, far less. This highlighted a compulsive habit to gamble – and losing at it too. That put the whole application into a different light. Having openly discussed with the tenant, they offered me the security of six months rent up front on a six month AST.

What about rent arrears for tenants in situ?

The first contact should really be the day rent is due to arrive. If it has not made it into your account, contact the letting agent or tenant if directly managing. Put them at ease in the first instance and don’t assume they have not paid. It could be a genuine mistake and if it is because they have not paid, you allow them to ‘save face’ in the first instance. Let them know its likely to be a problem with their bank and ask them to contact the bank to sort it out. From experience, this usually limits the problem happening in future months, as the tenant knows the benefit of doubt fell on their side the first time; but late payments again are less likely to be viewed in the same way.

If rent is not forth coming, then start a formal process. Writing letters in the correct way. Do not be threatening. You can also write to any guarantor at this point, notifying them they have signed as guarantor and notifying them that payment is required. Be very careful about contacting a tenant at their place of work. And if you do contact them that way, don’t leave a message with a colleague about the nature of your call. This could be viewed as harassment.

Shouldn’t your letting agent be doing all of this?

If you employ a letting agent, they should most certainly be managing this process. The worrying fact is how many letting agents do not. What’s more, from my personal experience I have found that what is often considered as a rent arrear from the tenant is actually not. The letting agent are being paid on time, they are just not paying the landlord.

Investigate exactly how a letting agent references prospective tenants before appointing them. And test their process. You should also find out how they organise and manage their regulatory requirements in respect of sending section 21 notices etc.

When all is said and done

I have had tenants for over 15 years. The odd tenant may have a blip in paying. But experience tells me that if they are late with rent more then once in a tenancy term, it won’t just be the twice. From my own experience it becomes continual. And every time the tenant is late or falls into arrears, it becomes easier not to pay the next month. And it is often best to let these tenants move on and find good reliable payers moving forwards.

Howard Bowes, MD, Harvey Bowes Limited.

10 tips before you let your property – by Sally Lawson

Sally Lawson, CEO Concentric Lettings, shares 10 tips before you let your property in the UK. With over 23 years experience in the property lettings industry, Sally has extensive knowledge and offers advice for prospective landlords. For more information about Sally and Concentric Lettings, please click the link below.


Freehold / Leasehold who’s who – by Bernie Wales

Bernie Wales, residential leasehold property expert, shares his expertise on who is who in the freehold/leasehold relationship in respect of residential property. For more information about Bernie Wales please go to www.berniewales.co.uk

Cardiff pin – property investors network – meeting 13th January 2015

Cardiff pin is a property investors network and business meeting. The meeting is attended by those new to property investing as well as seasoned investors. We also welcome those who work in services related to property, such as the Trades, Solicitors and Brokers. This meeting is a great place to meet new contacts and rub shoulders with like minded people. The meeting starts around 6:15pm, with informal networking until 6:55 when we sit down to listen to expert speakers. Firstly we have a mortgage update on the latest developments in the market place, followed by a visiting speaker who will present their specialist subject. We then have the opportunity for attendees to present a 20 second introduction to themselves (which is optional) followed by a 15 minute comfort and networking break before the main speaker presents their expertise. This part of the meeting finishes at 9:00pm and although some stay and network at the bar, we understand that those who have arranged baby sitters etc may need to dash off. We are a friendly and welcoming group of people and new visitors come along every month. To come along to the meeting for the first time as our complimentary guest, just go to http://www.cardiffpin.co.uk and reserve your place by registering. This will save you the £20.00 entrance fee for your first visit. If you have any questions, please contact me, Howard Bowes, Host of Cardiff pin on 029 2175 4150.

Take a look at our video above and listen to some of the recent guests to Cardiff pin tell you what they think of the meeting.

You can book your place now by going to www.cardiffpin.co.uk – and if it is your first time, use the voucher code “BOWES” to get in as our guest.

Wonga to write off customer loans

Payday lender Wonga has said it would write off the debts of 330,000 customers whose loans would not have been approved under new affordability guidelines according to news released today.

The Financial Conduct Authority (FCA) said the 330,000 customers who are currently in excess of 30 days in arrears will have the balance of their loan written off and therefore owe Wonga nothing.

Harvey Bowes has learned the cost of writing off the debt will be £35m.

There is £220m debt outstanding for the customers affected, at an average loan value of £667.

Wonga said it would contact the borrowers by the 10th October 2014.

And some 45,000 customers who are between zero and 29 days in arrears will be asked to repay their debt without interest and charges and will be given an option of paying off their debt over an extended period of four months.

The news comes just days after the company reported a massive drop in earnings.

Wonga’s annual profit has dropped by 53%, after the payday lender came under fire for the tactics it uses to reclaim money from borrowers in default.

It said full-year pre-tax profit in the 12 months to 31 December were £39.7m, down from £84.5m a year earlier.

The company came under fire over its previous tactic of sending customers bogus legal letters.

With the increase of negative media attention and the real cost of Wonga’s activities, one would hope they will either move towards an ethical and fair approach to consumers or cease to trade altogether.


Monmouthshire Building Society report increase in lending

Monmouthshire Building SocietyThe Monmouthshire BS continues to grow from strength to strength, reporting that gross lending for the financial year ending 30 April 2014 is £157m, an increase of 7.5% from the previous year at £146m. Pre-tax profits were also up, some 27% from £41m to £5.2m and the mutual also reported a 10.3% increase in total assets.

The Monmouthshire are a regional lender with strong products in both the commercial and residential sectors. The lender also has tailored solutions for Holiday Homes, Student Accommodation where a parent is buying a property for their sibling to reside in and rent remaining rooms to other students and furthermore, they have excellent HMO mortgage products.

Aldermore Launch into Bridging Loan Market

tick aldermore bridging financeAldermore have announced that they are launching Bridging Finance products. It is understood the bank lend up to 75pc loan-to-value for the purpose of short-term fixed rate residential investment loans and up to 65pc for commercial bridging loans.

Bridging finance has become a significant growth area in the property finance arena and with more lenders showing an appetite to lend in this field, along with existing lenders producing more competitive and innovative products, this is certainly an exciting sector of the market.

To find out more, contact one of the team at Harvey Bowes today on 029 2175 4150