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  • Property-a-holics

    Some thoughts on NMLI

    Lisa
    Thank you for all that information I had totaly misunderstood this 6 month "rule" as applying to remortgages.so your input makes a big difference. I guess quick turnarounds must be pretty rare selling to FTBuyers. I obviously don't understand the reasons behind this rule; am I just embarrasingly missing the blindingly obvious? You mention there may be legitimate reasons for this quick turnaround scenario , and give examples, I dont understand what could be the non-legitimate reasons? Is property bought at discount with a view to selling and immediatly put back to market a legitimate reason? Also I dont understand what difference it makes to the lender whether the property has been owned for 6 days, weeks months or years. I cant think of comparison, to guide my understanding of this. I do realise I must have a complete missunderstanding somewhere or the rule would not be there, what is the driving force behind this? I would have thought the longer the property has been on the market the more likely that it is worth less than the asking price so effectively the lender skewing their lending towards property that has been marketed for longer seems counter intuitive. Apologies in advance for my ignorance of the nuances in this market.
    with kind regards
    John

    LisaOrme said:
    Thanks John but I'm no expert! Your netiquette is fine :-)I think you'll have less of an issue with the valuation than you will with the 6 month requirement.To explain how this affects you; the CML conveyancing guidelines mean that the purchasers solicitors must declare to the buyers lender if the SELLER has owned the property for 6 months or less. It's commonly referred to as the '6 month ruke' though it isn't a rule - I only wish it was!For buy to let buyers this means there isn't a standard buy to let lender that will allow a purchase within 6 months. One will consider the purchase but lending will be based on the SELLERS original purchase price!For residential buyers it's a pain in the butt because lenders are proceeding or withdrawing indiscriminately. That's why I wish it was a rule; at least we know where stand then!I've seen lending pulled on the day of completion, after exchange! Even where lenders have already been informed of the situation. I'm also fully aware of those which have completed ok.Bear in mind many are legitimate purchases by an investor say at auction, complete refurbs or renovations and open market sales via an estate agent.If your buyer is paying cash not an issue!So it is this that will more likely hinder quick resales than the valuations.RICS valuations are recorded, though not all, and accessible by other valuers and if you don't do anything at all to the property it may well be more of an issue but again there's no guarantees either way!I advise investors to bank on holding for 7 months and cost accordingly. If your buyers mortgage gets pulled offer them the opportunity to rent until they can complete. Kind regards, Lisahttps://www.keys-mortgages.com
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    John,
    I can understand your confusion. Smile
    The six month rule was put in by lenders to "season the title". It is to cut down on the number of bridge/same day remortgage transactions where someone buys a property at a deep discount for borrowed cash (bridging loan) and then immediately or quickly remortgages up to 75% of OMV, essentially buying the property without a deposit.
    Lenders now like to see that the property has been completed on and owned for a minimum of six months, and that the purchase price has been recorded on the Land Registry.
    Hope that helps clarify?
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    Vanessa
    Yes I understand, that makes sense. Thank you for your patience.
    regards
    John

    Vanessa said:
    John,I can understand your confusion. :)The six month rule was put in by lenders to "season the title". It is to cut down on the number of bridge/same day remortgage transactions where someone buys a property at a deep discount for borrowed cash (bridging loan) and then immediately or quickly remortgages up to 75% of OMV, essentially buying the property without a deposit.Lenders now like to see that the property has been completed on and owned for a minimum of six months, and that the purchase price has been recorded on the Land Registry.Hope that helps clarify?
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