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  • Mortgages & Finance

    Broker classified us as a portfolio LL.....

    Refinancing Scenario.

    Reached out to a broker when the new PRA rules were just introduced, here was our situation.

    • 3 Properties with BTL Mortgages under personal name
    • 1 Property under Ltd Company (no mortgage)
    • Residential Property (no mortgage)

    They classified us as a portfolio LL and applied the stress checks etc, accordingly. Charged us a hefty fee (roughly 1000-1200) per mortgage app, and took over 6 months to get the mortgages arranged. One app actually fell through due to the stress tests apparently.

    After that painful experience with this particular broker, I came across a thread on here that stated the following:

    The PRA rules affect 'qualifying mortgaged BTL properties' only.

    ie - if they are unencumbered, or have a semi or full commercial element to it, then they are precluded from the restrictions.

    However, if you have 4 or more residential BTL properties which are mortgaged - irrespective of how owned in your portfolio, ie Ltd Company, personal, and any other legal entity - then they are included when you submit an application.

    So according to this definition I should NOT have been classified as a portfolio LL and the broker either made a mistake OR was deliberately misleading us.

    There is more to this sorry story that cost us many thousands in unnecessary fees, not to mention a very unprofessional cartel type attitude from them - certainly won't be using them again and will never recommend them to anyone.

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    As a busy broker (and investor) of 25 years I think £1000 up front fee is extortionate.  I generally charge £150. Different lenders do though have different ways of interpreting/applying the rules and applying products therafter.

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    I also think you've been fleeced there. I would personally always go to couple of brokers to get quotes unless you've secured a good broker you can trust.

    I note you've not mentioned names so maybe review them on Google to share your feedback to help others.

    As the mortgage advisor is part of a regulated industry I'm sure there will be a way to file a complaint and have the case assessed by the body that regulates it. You may be able to get compensation if you feel you've been given incorrect advice.

    (*moderator note: content removed*)

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    Saagar

    Disclaimer: I have no legal expertise nor am I a qualified advisor on any subject. A humble landlord using an open forum to exchange ideas and experiences. 


    The reason is that lenders definition is usually not identical to the Legal definition you quoted. Lenders are more conservative.

    whilst I agree with your analysis and your logic, the market has not evolved sufficiently and you are therefore classed as a portfolio landlord.

    one issue is that you obtain usually a series on individual property loans rather than one portfolio loan.

    a good broker should be able to advise you properly.

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    Chartered Accountant, Tax Advisor and Mortgage broker

    (and BTL portfolio owner)

    stuart@johnsonsca.com

    02039077022

    Hello Imi

    You said "However, if you have 4 or more residential BTL properties which are mortgaged - irrespective of how owned in your portfolio, ie Ltd Company, personal, and any other legal entity - then they are included when you submit an application.
    So according to this definition I should NOT have been classified as a portfolio LL and the broker either made a mistake OR was deliberately misleading us."

    Many lenders take all properties owned (whether mortgaged or not, whether in personal name or not) as an overview of all assets and liabilities, and so some lenders would still consider you to be a portfolio landlord based on their own internal policies, irrespective of whether the PRA says otherwise.  That is their prerogative.

    "Charged us a hefty fee (roughly 1000-1200) per mortgage app, and took over 6 months to get the mortgages arranged."  All fees are quoted up front in mortgage illustrations / KFI's and borrowers would have these costs (including the lenders arrangement fees, valuation fees, conveyancing fees etc) fully explained before an application is submitted.  

    Always check out the Broker Firm you are dealing with.  Look for testimonials, feedback, awards, size of the business, their specialist knowledge, their experience ....

    You raised a few other issues too, so if you require an independent service, formally accountable to you and to Property Tribes, contact the Property Tribes Financial Services team on 01206 654 444 or email advice@propertytribesfinancialservices.com
     

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    Thanks ALL for your responses.

    I agree with the advise given around doing thorough due diligence - that is our learning from the experience, we relied on them too much and fell for their "sales pitch"

    In terms of their fees - that was detailed in the T&Cs - however what we felt was that:

    • We were misled into believing that we automatically fit the new PRA / portfolio LL definition - which we clearly didn't - I take your point about individual lenders having their own criteria over and above PRA. This uncertainly was the main reason we went with a broker (else I tend to go direct to the lender).
    • We had to personally intervene by calling the lender multiple times directly as the applications were going nowhere, we felt that the broker should have been doing all the legwork, this didn't happen. Without OUR intervention the applications wouldn't have succeeded - hence the value of the broker in this instance was seriously questionable.

    We are contemplating taking this further - is there a regulatory body / redress scheme that most brokers subscribe to?

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    imiS,

    I would just like to add to my colleagues post earlier.  Some lenders would class applicants with 3 mortgaged properties as Portfolio landlords if your intention is to raise finance to purchase another BTL property.  So, three mortgaged properties and you are Capital Raising on a remortgage, for example, and your intention is to buy other properties would make you a Portfolio Landlord.  Similarly, if you already own 3 mortgaged BTL properties and apply to buy another, you will be classed as a Portfolio Landlord.

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