We are currently in the process of refinancing a number of flats in West London. An offer was out about a year ago; solicitors, mainly on the lender’s side, know how to make a mountain out of a mole hill. This, coupled with the usual delay in response, ensured the offer had to be renewed several times; and still they managed to find a reason not to do the deal. This reason was the equivalent of finding a needle in a haystack, but they managed.
So, we are back to the drawing board on this case. In order to avoid any further mishaps, we have sourced three lenders for this case. The rates are higher than the initial offer, given the new environment we are all in; and in my opinion this will only get worse, as time goes on.
There are a number of issues which we needed to be mindful of when placing this case. One is the properties are all rented to a housing association; another is the square foot is below the minimum size. This does not meet most lenders’ criteria. This throws out the majority of lenders.
We are also conscious of the time lines. They may take another three months to process the cases, meanwhile find another reason to say no – nothing to do with the anticipated interest rate rise of course.
Bearing this in mind we are moving the whole loan over to a cheaper bridge which has a development loan attached on there, as well as which will provide funding for the other three flats for which there is planning in place for.
The property is a freehold block with six rented out flats and permission for three more flats. Six separate leases have been created for each flat, in order to reduce the interest payment and to make financing more accessible.
We will also be applying for financing for the three flats which do not currently exist as well; with the assumption by the time they will be completed the offer will be in place.
If you’re in the fortunate position of owning your property assets in cash, that’s good. But, if you’re dependent on funding then in my opinion it’s best to take a 5 year fixed rate, to weather the storm which we have entered into but will get worse as time goes on. An agent who I met, who’s been in the industry for a few decades, is of the opinion this will all be over in six months. I do not think so. His perception is based on consuming the information on mainstream media. There are undercurrents which drive both economic and geopolitical events, and one needs to lift up the bonnet to see what’s really driving the market.