Tag Archives: BM Solutions

HMO Internal locks ‘deal breaker’? Advice, Latest Articles, UK Property Forum for Buy to Let Landlords

I’m at the point of exchange on an HMO licensed 5 bed house, currently let to students. I received a letter from the mortgage lender Birmingham Midshires (BM Solutions) saying one of their conditions is that there are ‘no internal door locks’. I checked and there are thumb locks on all the bedrooms. The letting agent who manages the house asked the students about removing them, they refused. BM Solutions logo

I’ve heard stories about BM Solutions withdrawing the offer after exchange, and apparently there will be 5 days between exchange and completion. I can’t risk losing 20% of my deposit if they discover there are still internal locks. What should I do? Is this really a deal breaker?

Apparently it’s only 1 of the students that has a problem with the locks being removed, but as I don’t yet own the house I can’t speak to her directly and can’t change the contract, everything is dealt with by the letting agent.

Has anyone else come up against this one? Should I risk it and tell the mortgage lender that I did request the locks to be removed (if they ask)? Or should I actually pull out now before it’s too late?

Any advice much appreciated.

Regards

Duncan


Buy to Let Mortgage products and market update – essential reading Buy to Let News, Landlord News, Latest Articles

Having just updated the Buy to Let mortgage products on our own in house Buy to Let Mortgage sourcing system and calculator I thought I would give you a summary of what’s Hot or Not in the current market.

Virgin Money have been added to the system because of their helpful attitude and criteria which includes:

  • Day one remortgages – So no need to wait 6 months to remortgage for cash purchases, refurbs, Auction purchases etc
  • First Time Buyers
  • Regulated Buy to Let

However Maximum LTV is 70%. Stand out different product is a 5 year fixed at 4.09% with £750 Cash Back and 2.5% product fee (better for smaller loan sizes where looking to fix costs long term is important.

The Mortgage Works (TMW) always been and old favorite of mine going back to 2003 have a selection of 80% LTV products and no income requirement for existing landlords.

Interestingly they have no longer term products currently above an initial 2 year deal. This will either be because they have purchased no long term funds or are uncertain of market direction at the moment. Example products range from:

  • 2.49% two year fixed with 2.5% arrangement fee at 60% LTV (really only a headline grabber) to
  • 4.14% 2 year fixed 2.5% fee at 80% LTV (one of the lower interest rate high LTV products)

BM Solutions were the old industry go to lender until introducing a maximum exposure of 3 mortgages, but still have one of the most comprehensive range of products up to 75% LTV.  They are also often helpful for flats above or adjacent to commercial premises.

  • 3.19% 2 year tracker £1295 fee 60% LTV
  • 3.89% 2 year tracker 0.5% fee 75% LTV
  • 4.34% 3 year fixed 1% fee 75% LTV
  • 4.99% 5 year fixed 1.25% fee 75% LTV

BM Solutions have NO customer service staff so any mortgages or further advances even must be done by a broker.

Kent Reliance are really mostly famous for being THE 85% LTV lender.

However minimum property value £75,000, proof of £25,000 income required stress tested at 192 times monthly rental income.

  • 4.99% 2 year fixed 2.5% fee 85% LTV reversion rate 6.58%
  • 4.89% 2 year discount 2.5% fee 85% LTV reversion rate 6.58%

Aldermore have a good range of 80% LTV products at 4.98% including 2, 3 and 5 year fixed and a varibale rate for the term. They will do day 1 remortgages for properties bought with a bridging loan on a like for like basis and inherited properties.

They will also consider customer with light adverse credit which very few lenders will allow including:

  • 1 or 2 missed mortgage payments over 12 months
  • CCJs and Defaults registered over 3 years ago
  • Missed unsecured credit payments such as credit cards, mobile phone, loans et

Principality have a penalty free no tie in 2 year discount product at 3.39% with only a 1% + £99 fee at 60% LTV.

Also interestingly they will consider Holiday Homes on their BTL range!

Godiva owned by the Coventry building society are the “Does what it says on the tin lender” I liken them to the Yorkshire tea, or a sliced white loaf of a the buy to let product market. Nothing spectacular just a good solid no frills value for money products.

  • 3.49% variable penalty free for the term of the loan, £999 fee max 65% LTV (very good value with flexibility)
  • 3.79% 2 year fixed, £500 fee max 65% LTV
  • 4.74% Standard variable penalty free no fee max 65% LTV

Cost and product wise the market has been reasonably stable with small improvements adding up each month giving a healthier range of options available especially in niche areas such as:

Terms beyond retirement age, Bridge to Let, Remortgages inside 6 months, Ltd company applications, Higher LTV, Lower fees, Light adverse, Holiday let and more.

All of the above products, lenders and many more can be found by using our Buy to Let calculator and quote engine Please Click Here

If you need any assistance with a Buy to Let mortgage you can also:

Email: info@property118.com or

Telephone: 01603 489 1182013


Now I’m worried Birmingham Midshires will raise their Tracker margins Latest Articles, UK Property Forum for Buy to Let Landlords

I’ve been following the news on this site concerning West Bromwich Building Society’s increase in Tracker margins and the Class Action. I thought I would check through our ‘Lifetime Tracker’ mortgage offer from Birmingham Midshires. I was in for a shock.

We’ve loved our trackers from Birmingham Midshires (BM) and have been enjoying rates less than 0.5% above the Bank of England Base Rate, which the ‘Illustration’ document reported would last ‘For Term’. Of course, we paid a handsome arrangement fee to secure the rate. The tracker margin seemed unchangeable, but West Bromwich Building Society’s move to increase their tracker rates suggests that anything is possible. Birmingham Midshires BM Solutions

The mortgage offer from BM in October 2006 does say “The mortgage will be charged interest at: a variable rate which is 0.4% above the Bank of England Base rate, currently 4.75%, for the term of the loan..” The accompanying Special Conditions do not seem to mention interest rates. It was the Standard Offer of Advance Conditions (2004) that contained the shock. Under the section ‘Interest’ it states that

“Unless you have a fixed rate mortgage …… we may change the interest rate payable on your loan at any time for any of the following reasons:
(1) to reflect changes in market conditions outside our control
(2) to reflect changes in the cost to us of raising the money we lend to customers:
(3) to reflect changes in general lending practice by other major lenders (including the terms on which mortgages are offered by them);
(4) to maintain or improve the general market position of our products in all areas of our business;
(5) ……….”

So BM can change the interest rate almost at their whim? In particular reason (3) is scary if West Bromwich and the Bank of Ireland get away with changing their tracker margins to BTL customers.

The text seems strange to me to describe their freedom to change a tracker margin. It seems to be the considerations for changing a traditional Standard Variable Rate of a mortgage. If it related to a Tracker margin I would expect phrases like ‘exceptional circumstances’ to be used. Also why does it refer to the interest rate rather than the more relevant tracker margin? The obvious reason to change the actual interest rate is to track a BoE base rate change, but this is not included. Why?

(The accompanying General Mortgage Conditions 2004 booklet merely refers to the ‘offer document’ on changing interest rate.)

A further confusion arises because there is no text that I could find which explains which of the various documents take precedence. The odious Standard Offer of Advance Conditions started with the instruction to “read them in conjunction with ..” the other documents and then the statement “Together these form the offer letter ..”.

Other Property118 posts suggest that West Bromwich had an even more messy set of documentation for the tracker offers which are now being changed. For example, they didn’t refer to their special conditions booklet, which BM got right in my case.

So I’d guess BM are waiting and watching on the outcome of the West Bromwich’s move.

Are you worried as well? I have contributed to the funding of the Class Action campaign despite not having any West Bromwich or Bank of Ireland mortgages.

The deadline for submission of instructions has now expired. However, it may still be possible to join the representative action subject to paying Court fees and an additional cost to cover associated administration. For details please email : carla@cotswoldbarristers.co.uk


How to get 6 BTL mortgages with BM Solutions Buy to Let News, Latest Articles, Mortgage News, Property Investment News

So many buy to let borrowers get frustrated because BM Solutions will only allow them to have 3 buy to let mortgages. However, now they have removed their minimum income requirements, this criteria is very easy to overcome for many borrowers.

The answer is to own the properties in your individual names. That way a couple can have three mortgages with BM Solutions each. Hey presto, that’s six mortgages with BM Solutions.

The are also many other advantages of owning the properties in individual as opposed to joint names. For details of this see my Landlord Tax Strategy.

If you would like to discuss further borrowing strategies why not have a chat with my business Partner, Neil Patterson. His contact details are npatterson@property118.com or you can call him on 01603 489 118BM solutions logo


12.5% return on cash invested on a newly refurbished Manchester based development Commercial Finance, Latest Articles, Property For Sale

Last week I was presented with a Manchester based buy-to let investment opportunity which looks particularly attractive. The gross yield is just over 11% but with the benefit of gearing, and having allowed for all costs, the cash on cash returns are coming out at 12.5%. Manchester Buy to Let

I have done some due diligence (you should always do your own though, please don’t rely on mine) and part of that was checking out the availability of finance on these properties.

The only possible drawbacks I can see thus far is that the maximum mortgage is 65% of value plus a lender fee of £995 added to each loan. This is due to the properties being priced at £42,500 and being sold as a new development. The issue with this is that BM Solutions are the only lender offering terms. As BM Solutions are part of the Lloyds Banking Group that can sometimes cause problems due to the group having a rule not to provide more than three mortgages to any one client. The Lloyds Banking Group includes Lloyds Bank, BM Solution, The Mortgage Business, Halifax and C&G.

If you can live with that, and especially if you are married or have a partner, and you and your partner have no mortgages with any of these companies, you could, theoretically at least, buy six of these properties, i.e. 3 each.

The alternative, of course, is to buy the properties for cash and then look to refinance them based on market value after say 6 months.

In the meantime, these are the numbers that came out when I analysed the deal using the Property118 Landlords Calculator:-

Property valued at £50,000 each (15 available, 18 already sold at full price)

Discount offered to Property118 to sell the remaining units 15%

Net price £42,500 each

Monthly rent £400 (based on comparables provided by local agents)

Gross rental yield 11.29%

Mortgage £28,620 based on 65% borrowing plus £995 lender fee added to advance

LTV 67.34%.

Deposit required for each property £13,880.

Interest rate 4.84% (Loan via BM Solutions – IFA to advise best product, this one was selected at random for illustrative purposes)

Mortgage interest £115.34 per month

I have estimated that 35% of rental income will be required to fund the costs of; advertising/letting, management, Gas checks, maintenance, ground rents, service charges and void periods This equates to a monthly averaged cost of £140.

Therefore, cashflow based on the current interest rate is £144.57 per month

Based on these figures the return on equity is 12.5% on cashflow alone. This is net annual cashflow expressed as a percentage of the equity in the property. This calculation is also referred to as; return on cash, cash on cash return, return on capital employed/invested, ROC and ROCI. A 12.5% return on equity is far better than you would get in a bank account and far greater than you can borrow money for too. Over the long term you may also wish to factor capital appreciation into the equation too.

This deal breaks even when interest rates hit 10.9%

If this is of interest and you would like to download details of the development with a view to arranging a viewing and/or making an offer please complete the form below.


BM Solutions scraps minimum income rules on buy to let mortgages Buy to Let News, Landlord News, Latest Articles, Mortgage News, Property Investment News, Property News

BM solutions logoBM Solutions, the leading BTL lender from the Lloyds Banking Group, has removed its minimum income requirements for all buy-to-let products in its range.

As from Monday 10th June, Birmingham Midshires will finally be joining a handful of other lenders by providing experienced property investors with BTL mortgages without the need to satisfy any minimum income levels at application.

Even though a borrower can still only have 3 mortgages across the Lloyds Banking Group brands (which includes Halifax, Lloyds TSB, C&G, BM Sols, TMB, Intelligent Finance etc.) we’re pleased to see that they have removed the minimum income required restriction, recognising that many investors are self employed and even though their accounts may show low net profits, that the rental income generated is the true indicator of affordability.

The ‘broker only’ lender has previously required a minimum income of £25,000 for all applicants but this rule has now been removed as they acknowledge that buy-to-let affordability is based on rental income, rather than personal income. This, they say, makes it more accessible to more landlords.

Your Broker will tell you the behind the scenes updated ‘fine print’ for all BM deals, including that certain provable income will still need to be supplied as part of the application process. BM has also changed its rental affordability calculation, which will now be based on 125% of the mortgage interest.

They say this is because it is the right thing to do to ensure borrowers are in the best possible position to be able to manage future payments if their circumstances change.

BM Solutions “One Minute Mortgage” process remains in place and is available to Brokers 24/7. The One Minute Mortgage provides mortgage decisions in less than one minute and allows borrowers to submit additional borrowing and multiple Buy to Let applications.

With a well tried and tested system, now coupled with ‘no minimum income’ requirements, BM Solutions are clearly hungry for more BTL business.

Changes will come into force from Monday 10 June.

To contact our recommended mortgage broker please complete and submit the form below.


BuytoLet Lender BM Solutions allows Student and Benefits tenants Buy to Let News, Landlord News, Latest Articles, Property News

BMSBM Solutions relaxes its BuytoLet lending criteria to allow landlords to rent to students and benefit claimants

It was recently reported that BM Solutions was looking at changes to its BuytoLet underwriting criteria and the rumors were that they would be looking to remove its £25,000 minimum income requirement.

The initial reaction by some market commentators was that to remove the £25k minimum income would lead to the door being opened to low income households who are more at risk of defaulting, albeit that it could open the door to buyers outside of London, and would be of particular help for self-employed clients.

Another rumored criteria change was regarding the Lloyds restriction on its BuytoLet criteria which only allows a maximum of three buy-to-let properties per customer, across the whole of the Lloyds Banking Group (which now includes major lending brands such as BM Solutions, Halifax, C&G).

So, what has changed? How have BM Solutions relaxed their criteria? Previously, the lender’s list of exclusions included student lets, tenants claiming housing benefit, rent rebates or rent allowance, asylum seekers and tenants benefiting from diplomatic immunity.

With immediate effect BM Solutions has now adjusted its criteria to allow BuytoLet landlords to rent properties to students and benefit claimants. They are also now willing to offer loans on properties with a maximum of five occupants, a stipulation attached to all properties, although BM Solutions has never lent on House of Multiple Occupation, where tenants sign individual tenancy agreements and this still hasn’t changed.

This news comes just over a week after The Mortgage Works has also in dropped its restriction on lending to landlords with tenants who are on housing benefits.

Other lenders which will lend to landlords with student tenants include The Mortgage Works, Godiva, Abbey for Intermediaries, Woolwich, Aldermore and Virgin Money.

Howard Reuben, Principal of H D Consultants says that these most recent criteria changes are testimony that Lloyds is pursuing more business. He says “This criteria update appears to back up the news that BM Solutions is looking increase business via criteria rather than chasing the rate. This is a controlled measure which will provide some relief to a number of landlords”

From 19th March, BM Solutions has announced new semi-exclusive products starting at 3.89% up to 75% LTV available for purchase and remortgage, and which also benefits from a £500 cashback too.

To discuss any Buy-to-Let deal with our preferred broker please call us on 01603 489118 or email info@property118.com

If you would like to add your own requirements and search for the most popular available Buy to Let products please click here

Buy to let auction property finance calculator


Caught out by Lloyds three mortgages rule Cautionary Tales, Guest Articles, Landlord News, Latest Articles, Property News

Readers WarningJust in case you are not aware of Lloyds three mortgages rule here’s how it caught me out.

I bought a run down terrace house last year to refurbish and wanted to sell once complete. However, to finance a new opportunity, which came along to soon, I decided to get a buy to let mortgage with BM Solutions.

I was offered the mortgage in principal subject to valuation so I paid the valuation fee of over £400 and had the property valued. It all came back fine and I was sent a mortgage offer last week Continue reading Caught out by Lloyds three mortgages rule


Northern Rock BuytoLet Useful Criteria Buy to Let News, Landlord News, Latest Articles, Property News

Northern Rock BuytoLet who are part of Virgin Money have confirmed they will consider “Day One” remortgages otherwise known as “Back-to-Back” and Regulated BuytoLets for the use of close family members.

This is a very niche area for Lenders with only Mortgage Trust as the other company able to consider remortgages inside six months of the purchase date when significant works have been carried out and BM Solutions who will consider Regulated BuytoLet applications. Continue reading Northern Rock BuytoLet Useful Criteria


The Mortgage Works BuytoLet major criteria and product changes Landlord News, Latest Articles, Property News

The Mortgage Works BuytoLet team have made major changes to their criteria and products focusing on First Time Landlords, Let to Buy, Purchasing from a family member and withdrawing from the regulated BuytoLet market.

This is significant for the whole of the BuytoLet market as The Mortgage Works have a very large market share of new business due to its popular, products, criteria and 80% Loan to Value range. All the changes detailed below are now in force for new applications. Continue reading The Mortgage Works BuytoLet major criteria and product changes


Property Forum and News website where UK landlords and letting agents share best practice