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  • Mortgages & Finance

    85% LTV Commercial funding

    I have been offered this funding (as a broker) many times by mortgage brokers who would like hefty upfront fees and DIP charges for providing the service. The rates offered are 4.2%-4.9% interest only for 2 years (a remortgage with another lender must be sought) then higher charges apply.
    Even Barry Danser was offering this a short time ago although he wanted a zillion year NDA signing before he would give out even a tiny detail.
    Does this exist in the BTL world? Have you come accross it? And more importantly, have you completed any deals using it?
    regards
    Mark
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    Hi Mark
    yes seen it offered by about 6 people so far all slighly different offering but essentially the same deal and the NDA!
    Why would a lender/broker get you to sign an NDA - first alarm bell! Unless of course they don't want you telling everyone about the upfront fees you paid and lost!
    We've had some discussions on PIPA and I've spoken to a number of people and long and short is not a single person has seen a penny yet. Plenty have applied and plenty paid the upfront fee but no ones actually got any lending.
    My own broker has been in the business over 20 years and said last time finance was at the bottom similar schemes popped up; all scams of course aimed at getting upfront fees from people desperate for money.
    I as much as anyone would like to hear of someone getting money on this deal. I alerted Barry to the potential scam, he told me he was happy with it so I asked him to let me know soon as anyone actually got any money so we'd know it was genuine and I haven't heard a thing. He may just have forgot...!
    There's an 80% against open market value offer I'm investigating as well as (shock horror!) a genuine no money down arrangement that doesn't breach CML guidelines. If they come to anything I'd be the first to let people know but I'm sceptical...
    Lisa
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    Lisa All comments are for education and information purposes only and do not construe as advice or a financial promotion. No liability is accepted for comments made. If you wish to receive information in an advisory capacity then please contact me about becoming a client. www.keys-mortgages.com

    I am aware of a number of provider of 85% commerical finance but would make the following comments:

    1) The providers are normally acting as a conduit for a trust, HNWI person or property syndicate ie has very little control over decision making and timing;
    2) The providers can fill their funding book by lending much less than 85% and are inclined to cherry pick the best deals depending upon the suppky of opportunties in the market. Currently they are plentiful.

    Charlie
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    This idea of fantastic LTV's has been floating around for a while and it is the bain of our lives as established quality brokers -
    https://www.mortgageintroducer.com/mortga...dsters.htm
    I am never going to say that there are no such deals out there, but would always argue there is no such thing as a free lunch. Why would savvy investors (because we are assuming they are savvy enough to have amassed the cash) lend at terms even the banks wouldn't entertain, and if they lent at 75% they would still have the pick of the security/deals and carry less risk.
    A good measure is that a lot of these supposed deals are marketed ideally to end users who probably don't have anyone looking over their shoulder to help them, if they are as good as they say why not share them with good quality brokers who could actually give these investors the quality they supposedly seek.
    I am asked often do we charge an upfront fee, the answer is yes but only a nominal one that is offset against the full fee that is liable upon getting an offer. If the applicant backs out for any reason at least our costs are covered, and a solicitor will still charge for abortive legals if a property falls over, why not ourselves, we are professionals after all.
    The article above highlights the excessive up front fees that a lot of packages demand and how we as a trade organisation are trying to get rid of anyone who is less than transparent in how they do business.
    Do report any instances to the NACFB whether the perpetrators are members or (more likely) not.
    Dave Winter
    Property Investment & Business Funding Solutions
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    I'd be interested to know when you get your product sorted Lisa, if any other brokers among us have actually seen someone complete with this type of product I'd be interested to know. It would seem that walking against the wind on this one
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    Great input from Dave Winter. Thank you Dave.
    We are in the biggest financial drought in living memory - it seems to me anyway ....
    Lenders have no appetite to lend, and they can cherry-pick the cream of the crop of applicants. With a good salary, squeaky clean credit rating, proof of deposit etc you still have to walk over hot coals and jump through hoops to get on the shortlist.
    Everyone involved in property needs to adapt their business model to adjust to the severe financial drought IMHO.
    Change is inevitable - growth is optional.
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