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  • Mortgages & Finance

    Paying for own solicitor or free legals deal

    Hi,

    I’m hoping a broker on here may be able to help me.

    I have a property on a single freehold title that is split into 3 self contained flats. I live in one and rent out two.

    I’m looking into creating new 999 year leases for each flat at the same time as remortgaging the two rental properties only. They will have less than 40% LTV.

    The potential issues are me living in the other flat, the leases being newly created, and the exposure limits of 2/3 of the flats in the building being mortgaged (although could go to two different lenders who were ok with the first two issues).

    So I approached three brokers in total - the first two I have worked with in the past who both said they would look into it but never came back to me.

    The third said The Mortgage Works would fit the bill and were OK with all the issues and got agreement in principal on a 1.54% two year fix with free basic legals and valuations.

    I explained to the broker that the new leases would have to be registered on the same day as the mortgage was since the existing charge would need to be released first, which would only happen after drawdown of funds.

    So TMW’s solicitors have confirmed that they cannot work with my solicitor who is going to draw up the leases to do this and they would need the leases registered in advance.

    My solicitor is on TMW panel so I asked the broker to check with TMW if I could just use them to do the remortgage as well and pay for it myself (at an additional cost of £500 per flat).

    TMW said yes, but I cannot do that on this deal. I need to move onto a deal that does not include free legals, and that is at a worse rate of 1.64%. That just seems strange to me as I’m saving TMW money on the fees!

    Does that seem correct? Thanks for your help.

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    Hi

    I'm a buy-to-let broker and am quite familiar with TMW. Unfortunately, that does sound correct, annoying as it sounds. With each mortgage product, if it offers a free legals product, it goes in line with that particular rate. As you're paying for your own legals, it will need to be selected on a product that does not offer free legals.

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    Thanks for the reply. How frustrating!

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    Hi,

    i think you you have a bigger problem here. Unlike most lenders TMW do not have personal exposure limits in that they will not lend again a certain percentage of the block, their criteria I believe is not to allow an applicant to own more than 20% of the block with whichever lender/unencumbered. That is to say that if you owned two flats in a block of ten then would not be willing to accept finance for your purchase of the third, irrespective of how or with which lender the original two were funded.

    Another point to consider is how you intend to grant these leases. Will you be granting a lease to the existing entity (freehold owner) on all three properties and moving the freehold in to a different entity? If you’re not granting Lear’s to all three flats, but intend to keep the leases in the same name as the current freehold this may leave significant value on the freehold when it comes to transfer.  Do you envisage this being a re-mortgage or purchase?

    I’d be more than happy to process this application. We certainly have capacity and won’t just not respond like your previous two brokers! If you want assistance, please don’t hesitate to get in touch on 07824809473 , 01249 652939 or at Wayne(at))dmifinance.com

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    Thanks for the reply. TMW have already confirmed they are OK with my ownership of all the leases of the flats in the building. The freehold and new leases issues are all in hand as well (the freeholder will be a separate entity and the flats on 999 year leases so the freehold has very little value).

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    Hi ARP2018,

    I have contacted our area manager for Nationwide regarding this and I am afraid your broker is correct in that if you no longer want one of the freebies they offer then you have to pick a product with no freebies at all.

    I believe the product you were going for was B23887 (2yr fixed 1.54% with £1,995 fee) and the one your broker was suggesting is B23888 (or a variant thereof – 1.64% 2yr fixed £1,995 fee). 

    But there is a 1.49% 2yr fixed with no free legals B23871 that might be worth a look.  It is up to 65% loan to value rather than the ones you have been looking for which are up to 50% but that shouldn’t matter. 

    I hope this helps,

    Cat

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    Call the PT Broker Hotline on 0333 363 6507 or email us at ptbrokers@johncharcol.co.uk

    Thank you Cat, that’s really helpful and much appreciated that you checked. I had a look on TMW website at the product you mentioned and I believe that one doesn’t have free valuations though? Is that correct?

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    You are quite correct – that product has a slightly lower rate but no ‘freebies’ at all.  TMW have two sets of products, one with the free valuation + free legals and one without.  If you don’t want one of the freebies then you have to choose from the second set.  This can be frustrating but it is often down to systems in the background so picking which bit we, as brokers/clients, want and which we don’t want simply isn’t possible even though it sounds easy enough to simply de-instruct a solicitor and replace with another.  It’s just the way things are sometimes unfortunately, I wish I could help more.

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    Call the PT Broker Hotline on 0333 363 6507 or email us at ptbrokers@johncharcol.co.uk