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Insuring The Future

15th September 2021

The client whom I wrote about last week, was a little fixated on getting a rate below 3%.  For some reason, some clients think if they push hard enough they can bargain the rate down, this is most definitely not the case.  Retail rates are set in stone, they are fixed and packaged; and in many cases sold off.

Flexibility does exist in the lending market, but more in the bridging and commercial sectors, where there is a person involved in the actual pricing of the product and not a machine.

The only way I explained we could reduce the rate was by re-looking at the term.  I wasn’t actually expecting to get a rate below the 3% level to be honest, but lo and behold it existed, and without an expensive arrangement which normally tags along to compensate for the low rate.

We managed to source a rate of 2.89% with a £995 fee.  No easy feat; considering there are constraints, for example, it’s in a Limited Company which owns a freehold, which has several undersized units within the freehold.  These factors whittle down the number of lenders.

But we now have the go ahead.  The cost of this on the proposed borrowing of £900,000 will only be £2,167pm against an income of £6,800pm.  Now, we just need to go through the application and progress this case, before the rate expires; as they look like they will be increasing not decreasing.

On another topic; we recently sourced a property in South East London, in an area which we have been focusing on, for many of our clients.  Prices and rents have already been experiencing a strong push upwards despite the current situation.  This is in stark contrast to Central London, where prices have softened and rents have seen dips of 30-40%; understandable, when international travellers and students have been absent from the market.

A client approached us in order to source something as an investment for the future, he appreciated that even on a reasonably decent salary, it is difficult to save for an increasingly expensive future. Property is one of the ways, which if done sensibly, can strengthen one’s future.  With this in mind, we managed to source a lucrative deal, a two bedroom flat for £265,500.  This was purchased by the current owner for £284,000; and then they spent £27,000 on the property.  So, the owner was in for £311K in total.

The flat was initially purchased to live in.  It was bought and developed with emotion, therefore there was, what usually happens in such cases, an over expenditure.  Their circumstances changed and it was rented and now it needs to be sold.  So, our investor is not only getting a great deal in a location which is rising but the property has been finished off to a high specification which one would never do if it was a BTL.   One similar property has popped up in the market for £320K.

My client did not have enough of a deposit to put down and therefore he teamed up with a relative.  They wisely decided to purchase the property in a Limited Company; and the transaction is progressing smoothly.  Hopefully, once this one is under their belt it will whet their appetite to do a few more deals.

The property is currently rented and therefore has the benefit of rental income from day one.  Given the high spec nature of the property it is even more important to ensure decent tenants with good references are chosen going forward; it is not enough simply that they pay the rent on time.  A refurbishment will cost around £15-20K to bring it back up to standard.

We have been sourcing properties for our clients in this particular area for many years, and will continue to do so.

Suresh Vagjiani

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