Mark Alefounder

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Hi Terry.

I used to think that keeping all borrowing under the one roof was a fantastic idea and I worked for a lender who was a real advocate of putting such facilities in place. At the time there wasn't a great many lenders who were offering similar facilities and as a relatively new bank we were incredibly busy and the demand for such a facility was high.

Clients loved the fact that it was so easy to manage their finances compared to how it was before. Only one loan, only one facility agreement, only one D/D etc. Another advantage was that facilities were offered across the value of the portfolio. That meant although there may have been some property at 85%+ LTV and some at say 30% LTV they could have perhaps 70% across the board.

As has already been mentioned this was fantastic while the Status Quo remained. But it didn't.

With the introduction of Basle III the pricing and structure of these facilities came under increasing scrutiny and for Banks to offer such facilities became very expensive at high LTV`s. As a result we began to reduce the amount we could offer across a portfolio from 70% to 65% to 60% and further

In real terms this saw clients with entire portfolios secured with one bank seeing their agreed facilities being eroded. Clients who were attracted to and benefited from the single portfolio facility suddenly being unable to move their business forward as they had planned. In some instances they had smaller facilities overall than when they first joined.

If we have learned anything in the last 5-10 years its that Banks/Lenders change their terms, move the goalposts, dip in and out of certain areas of the market. The only certainty is uncertainty.

Its one of the oldest sayings I know, the "Dont put all your eggs in one basket". With property it really is true. Products will come and go, lenders will be keen on a sector and then back away. As long as you spread your risk, hedge your bets or whatever you want to call it you should be OK.

If you risk everything on the one horse and it doesn't win thats trouble. Back a couple of horses each way and suddenly watching that race becomes far less stressful!

Mark Alefounder
HD Consultants
07716647928... Read More

Hi Rebecca. I would suggest that this is something that can only be determined by someone who is aware of your overall financial position. If you have an Accountant already then by all means chat to them but you may be better off finding a Tax Adviser on this one.

In addition I always think having your existing finances reviewed is absolutely vital. As a Financial Adviser myself we meet so many people who don't really know their financial circumstances well enough to be able to make some of the decisions you are looking to make so perhaps a Financial Review as your starting point makes sense.

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Hi Alistair.

I would suggest speaking to a broker like myself to see exactly what your current financial position is. There may be strategies that you haven't yet considered which could see you achieve what you want. I would be happy to have a chat to you and see if I can help in any way.

I can be contacted on mark@hdconsultants.net or on 07716647928.... Read More

Hi Jag. I wrote the article below a while ago which although doesn't answer your question directly shows the knowledge of the HMO market that we have at HD Consultants. I would be more than happy to chat to you about the strategies that may be available to you.

Everybody is enquiring about HMOs at the moment. It really is the topic of choice for a great number of property investors, be they new to the property sector or those with vast experience. It’s almost as if some feel incomplete without an HMO in their portfolio.
I won’t go into the definition of an HMO property or the rules regarding licensing etc. This can often vary from region to region according to the local Councils own definition of a home of multiple occupation. In fact in terms of licensing some lenders will demand a license be in place whether it’s a council requirement or not.
Unless you are one of the lucky few it’s likely that you will need to arrange some kind of finance to purchase your HMO. Before we go any further, if you didn’t know already, HMO finance is more expensive than a basic Buy to Let. It will be more expensive in terms of interest rates, arrangement fees, solicitor’s fees and valuations. However, don’t let that put you off. Very rarely do I come across someone who moves away from HMOs based on these higher costs.
It’s fair to say that every lender approaches HMO finance in a different way. Lenders who once had an appetite to lend are no longer in the sector whilst new to market lenders see a new opportunity and are keen to establish their place. Meanwhile others will appear to move in and out of the sector almost on a whim. Whilst your average Buy to Let facility varies between lenders criteria for HMO finance can differ much more markedly.

If there was a single word to sum up what all these lenders are looking for when it comes to an applicant for HMO finance, it’s EXPERIENCE. Unfortunately the definition and measurement of “experience” is not the same for every lender. It can vary from 12 months to 3 years and everything in between. Without doubt, obtaining HMO finance is more difficult than that for a straightforward Buy to Let. The mischievous in the market have even suggested that a large number of banks have created ingenious barriers, hoops and hurdles to try and halt the number of properties being converted into HMOs, for fear of the effect on housing in general. Thankfully with brokers like myself investigating and analysing what’s on offer and maintaining contact with the lenders directly we can navigate these obstacles for you.
Unfortunately, typically, getting HMO finance is often a longer process than your “standard” Buy to Let and that is in part due to the additional due diligence that most lenders will undertake. It’s likely that even greater consideration will be given to your credit report, your bank account conduct, the length and type of your employment and your overall property experience to name just a few.
So what tends to be the barriers and obstacles that come up most often? What reasons do lenders regularly cite for being unwilling to assist?
• Experience. Lenders expect minimum levels of experience, often at least 12 months and up to 3 years before some will provide finance.
• Not an owner occupier. Lenders take great comfort from the fact that you own your own home.
• Levels of debt in the background and in particular any unsecured debt. Credit cards, store cards and loans can make a big difference to a lenders appetite.
• Location of the property. Is it in an area that has other HMO`s? Does an HMO fit with the surrounding area?
• High Loan to Values. The higher the LTV the more robust the rest of the proposal needs to be to reflect that.
• Valuation. There are a number of different ways that lenders and their valuers assess an HMO. Don’t be over optimistic simply because the rental yield is so good.
• Exposure. The number of properties a lender will allow you to finance with them is ever changing. Always consider your exposure with certain lenders.
This list isn’t exhaustive. I would love to outline all of the various lenders and their individual principles/criteria but to be honest there would simply be too many to list. Not only would such a list be incredibly confusing, it’s likely it would send you to sleep!
We are experts in all aspects of property finance and that includes HMOs. We can help you find the right solution to your individual circumstances. Wherever possible we will take into account your future plans as well. If it’s about building a portfolio you should start with a solid foundation. If you have already started your property journey then perhaps it is time to review that foundation and strengthen where necessary.
Advice is what we provide. Advice based on your own very unique situation. What we do is sit down with you and review what you have, analyse your finances and advise on improvements and strategies that will help you reach your goals.
If you are considering purchasing an HMO or just want to discuss property finance in general then please don’t hesitate to contact me. I would be delighted to review your position and suggest ways forward. Please call me on 07716647928 or email me on mark@hdconsultants.net... Read More

The arrangement fee is £995.00. This can however be added to the loan.... Read More

It's a great product and one that will make other lenders think about what they can offer.

I don't think it will be to long before there are other options available in the market but it's good to see that TMW have been first to react with something that landlords have been asking for.

It really is a good time to be financing new property purchases and perhaps revisiting facilities already in place.... Read More

Hi Hazel. I agree with you and think one of the biggest problems investors face is the attitude of some professionals who simply "order take".

Investors, whether new or experienced want to receive advice as part of a comprehensive review. What is often received is more akin to a Fast Food experience.
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