11:50 AM, 10th January 2011, About 11 years ago 3
Two of the UK’s largest buy to let mortgage providers have introduced a criteria not to accept mortgage applications for properties purchased through property sourcers. This has angered many people who don’t have the time to source properties for themselves or the necessary negotition skills.
The reason that lenders have made this decision is that they beleive that the quality of business and ethics of many of the larger property sourcing companies are questionable. It’s a real shame for the ethical operations though and a few of them are getting together with a view to forming a steering committee with the intention of forming a professional body with an OFT Registed Code of Practice, membership criteria and independently operated grievence procedure. However, it is likely to take at least 9 months for such a body to be created. In the meantime, it is unlikely that The Mortgage Works and Birmingham Midshires are going to change their lending policies.
Therefore, as two lenders are already so concerned we beleive that users of property sourcer services should also be extremely diligent when deciding which companies to deal with. Accordingly, we have put together the following guide:
Point 1) Be VERY wary of companies offering fully packaged deals.
Point 2) Decide specifically what you want to buy and where. Then instruct a local professional to source to order.
Point 3) Ask them if they can arrange No Money Down financing. If they say yes back off quickly – it’s now mortgage fraud. For further explaination see this post.
Point 4) Leave yourself with cash in the bank for a rainy day. For further explaination see this post.
Point 5) Ask them if you can use your own mortgage broker and solicitor. If they say no be suspicious.
Point 6) If they offer you a ‘scheme’ to reduce the deposit levels required, tell them that you want to call the mortgage lenders they recommend to check that the scheme doesn’t involve mortgage fraud.
Having never used or even considered using a property sourcer myself I’ve not previously given a massive amount of thought to how I would go about finding a good one. Having said that, based on my general knowledge of the industry I would at least want to see the following list of information from any potential candidates if using a property sourcer was my intention:
A) Ombudsman registration – and I would Google the firm and contact the ombudsman to ensure the registration is real and check how long they had been registered.
B) Copy professional indemnity insurance policy – same checks as above.
C) Copy data protection licence – I would want to be sure that anybody holding data about me would be licenced to do so.
D) I would ask for a list of 5 property addresses they had sourced and completed for clients in the last two years. I would then find out who the owners are now via HM Land Registry and contact them for references. If you don’t know how to do this your solicitor will.
The above list may not be completely fool proof but it should sigificantly improve the odds of you finding an ethical sourcer to deal with and reduce the odds of you getting ripped off.
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