Apart from yet more of our banks posting record losses and the stock market plummeting to an all time low, not a lot has been happening this week in the financial markets.
Well flippancy aside, the mortgage market is plodding along with no signs of a rebound yet. In fact – a survey of IMLA (Intermediary Mortgages Lenders Association) members has revealed 75% of lenders believe that the securitisation and wholesale markets for prime mortgages will have recovered by 2011. The research also found 73% of the association’s members think that the British economy would begin to recover in 2010. “It might feel as though the past eighteen months have been a mortgage apocalypse, but this research shows there’s hope”, said Peter Williams, executive director of the IMLA. “The securitisation funding model is basically sound, and I think it’s realistic to expect activity to resume gradually when industry reforms and the government asset guarantee scheme is finally up and running.”
So what does this mean? Well, my own interpretation is that this year is going to continue to be a tough one and that the only mortgage lenders that are going to lend will be the existing big players. When we see the likes of Capital Home Loans and Paragon come back into the market, we know things are recovering although realistically this looks like this will be late 2010/2011.
And how does this affect the property investor? I’m afraid things aren’t going to get better for a while yet and the deals that are on offer now may even look very attractive in a few months time – so no time to strike like the present. This has to be balanced, after all, with the very low property prices on offer at the moment.
Tip of the week 1
More and more people are being refused the Decision in Principle with lenders because of adverse credit they were unaware of. If you are unsure about your current credit situation then I would advise you to check regularly your credit report. Currently with Experian you can access your report for FREE so use this link below and claim your report now FREE Experian
Tip of the week 2
If you are a property investor who speaks to motivated sellers on a weekly basis then you definitely should be using our debt management services to enhance your own deals. How? Well let me give you one example:
The vendor has a property worth £200,000 with a mortgage of £100,000 and unsecured debt of £50,000.
Investor 1 offers £150,000 for a quick sale – so the vendor can pay off all their debts.
Investor 2 (YOU) offers £150,000 for a quick sale however you advise that after they have paid off their £100,000 mortgage you will refer them to your debt management team – so rather than immediately paying off the creditors with the £50,000 extra released you will go for a “full and final settlement” which could result in 30%-50% being written off.
The debt management team manage to get a full and final settlement figure (with associated costs) down to £34,000 which means that the vendor will save £16,000.
Benefit for the vendor:
Save money
Can hand over the debt management process to an experienced team who will handle all paperwork and hassle
Benefit for you:
Earn money – in this example you could earn 5% of vendor savings = £1000. This is a way for you to create an additional income stream from the same deals you are buying anyway.
Gives you a competitive edge when negotiating your purchase.
This of course is just one example of how you can use debt management to enhance your business. There are many different examples and many different scenarios so if you want to know more then please email me at john@residentbroker.com This e-mail address is being protected from spambots. You need JavaScript enabled to view it or call me direct on 07974 198 396 and I’ll let you know how it works.
