Feeling ripped off by PRS lenders?

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0:01 AM, 18th October 2024, About 2 months ago 4

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With interest rates skyrocketing I have become less tolerant with lenders in the PRS sector. I have an uncomfortable feeling of being ripped off.

Here are some examples:
1. Preferential rates only offered to new customers. The insurance industry used to do this until it was made illegal.
2. Tracking rates. I took one of these for a couple of BTL’s and noticed that the last decrease in the BoE was only passed on to me in the following month. I am sure that it’s my fault for not reading the small print, although I am pretty sure they charge the interest daily.
3. Loan refusal. My business partner got into a bit of bother with his credit card, this impacted a preferential rate decision. The amount in question was £1k which when compared to the company loans of £500k, never a payment missed, seems a little harsh.
4. Rip off deals. Offered 7.34%, 2 year, no fees, redemptions of £9k Yr1 and £6k Yr2. SVR 7.5%. So, to save approx. £40 a month I have significant redemptions and as we know rates are only going one way.
5. Fees added loan and then telling you that your LTV is now 75.5% and no deals available.
6. Inaccurate valuations. Desk based valuations at 30% below market value
7. Using this forum to say what a great deal you have and then when you look there is a 5% plus fee on a 2 year deal. For the uninitiated divide the fee % by the number of years and add to the rate – this is how the banks do the accounting. So a 2 year deal at 4.5% with a 5% fee is actually 7%.
8. Not offering different rates based on LTV for renewals but preferential rates for new customers with lower LTV’s.

These are all real examples as they have happened to me, with the exception of 5, given I was an existing customer and explained it was their fees that made it 75.5% in the first place.

Either we need better regulation in this sector or the lenders need to start playing nice. Given the state of the PRS and the number of LL’s leaving there are going to be fewer clients, so you had better start playing nice.

For me personally I am not tempted to leave the sector because of the RRB, S21, EPC, CGT issues however I am tempted to give up because of all the above and the additional effort required to circumnavigate them and the uncomfortable feeling of being ripped off.

What does the Property118 community think?

Thanks,

Mark

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Tags: BoE Rate Tracking, Business Loan Discrimination, High Interest Rate Deals, Interest Rates PRS Sector, Loan Refusal PRS, Loan to Value LTV Issues, Preferential Rates New Customers, Property Lenders Issues, Redemption Fees Mortgage

Comments

Jason

8:25 AM, 18th October 2024, About 2 months ago

The joys of leverage buying. If they are not careful and the numbers don’t work then people will just sell. I factor this into my ROI and 9-6months before renewal time if I can’t make the numbers work then time to sell.

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Monty Bodkin

9:04 AM, 18th October 2024, About 2 months ago

"With interest rates skyrocketing"

?
Interest rates are falling.

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Just Be Happy

11:45 AM, 18th October 2024, About 2 months ago

It's a matter of shopping around. When you factor the fees into the "effective rate" you sometimes get interesting results. I was quite happy to pay a 5% fee to my lender for a 5-year fixed rate as the net rate including fees was still the cheapest. Also the lender based their LTV calculation on the pre-fees loan amount, even though the fees were added to the loan. The limited company (SPV) mortgage market is unregulated as we are supposed to know what we are doing, we just need to check the small print and make sure the product is suitable.

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Mark C

9:47 AM, 20th October 2024, About 2 months ago

Reply to the comment left by Monty Bodkin at 18/10/2024 - 09:04
Indeed they are now. I should have added “over the last 2 years”.
Maybe a lot of people are in the same boat with 2 year deals taken, after which rates significantly increased, this when the next deal has to be made there is little choice but to take a higher rate and then switch again when they are lower.

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