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 With The Mortgage Works pulling out of the self certification market last week, it seems to indicate the end of self cert mortgages as we know them.
The remaining lenders, namely Platform and Beacon, will almost certainly follow suit, and then there will be none.
Rumours have been rife that as part of the FSA review they will potentially ban self-cert mortgages, and so it looks like lenders are pre-empting this decision by simply withdrawing these types of products. Not good to be seen to be last man standing, so to speak. Fast-track mortgages (which were never really meant to be self-cert but fast-track as in fast track underwriting) are also being withdrawn by various lenders across the board.
The Council of Mortgage Lenders are saying self-cert shouldnt be banned but that we should all revisit the definition of self-cert and take practical steps to make sure affordability considerations have been taken. Hmm.
What does this all mean? Well, going back to my newsletter in April (What, you cross reference your own newsletters? Sad, isnt it) I spoke about the self-cert trap.
It seems that self-cert trap is well and truly here. How?
Anyone who took out a self-cert mortgage within the last few years and now wants to move will have great trouble, unless they can now prove their income. Apart from the option of porting their existing self-cert mortgage, they could be trapped in their property for quite a while that is until the FSA and the lenders decide that self cert mortgage are valid again. It is not only those who are trapped, but there are thousands of new applicants that, for whatever reason, will find it difficult to prove their income who now will be unable to get a mortgage.
TIP OF THE WEEK: Review your relationship with your letting agent
This weeks tip comes from a friend of mine, Greg Jackson, who I really can't recommend enough. From personal experience, I know he practices what he preaches and is one of the few true mentors, for want of a better word, that actually is out there buying rather than just teaching.
If you dont know Greg, then he is an experienced property sourcer and full-time landlord, and this is what he says re: letting agents.
Letting agents take your money from you. Most of the time they do nothing other than process rental payments, and then when you do need them you can often feel you dont get the support you pay for. All the time, from your personal letting agent skills point of view, you are becoming weaker and weaker personally from lack of practice. This is what agents want. They want you to be dependent on them. Like most professions, they have a vested interest in mystifying what they do so that it seems hard for you to do it. For some landlords, with remote portfolios, they dont have the luxury of not using agents. Personally, I recognised years ago that as my portfolio grew, I would have logistical problems if the portfolio grew in a widespread geographical area. Hence my decision to portfolio build on my doorstep. I have no letting agents helping me. I do have a well organised system of dealing with the mundane aspects of what letting agents do. It isnt difficult its just common-sense housekeeping. It also forces you to speak to your tenants and that way you can anticipate issues, good or bad, before they hit you in the face. It makes you a better landlord. I accept that many people will always use letting agents the main reason being lack of time if they are working in full-time employment. In that case, dont sit on your laurels! Youre probably paying too much for management of your properties. Explain to your letting agent that you are strongly considering self-management, but may stay with them if they can match the great rates other agents locally are offering (Ill be very surprise dif you cant find better prices by spending 2 hours phoning round). Dont just tell them this show them the evidence of your research in order to totally convince them of your efforts. A friend of mine has recently saved £1200 per year by using this tactic on his 8 rental properties! I strongly advise that you at least consider doing self-management. Why not simply try it with a few properties and evaluate matters from that point?
You can contact Greg on www.propertyinvestmentcoach.co.uk.
As always, call one of our advisors today for more information 01424 205 373
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