Is this another sign of the credit crunch?

During May Birmingham Midshires added a note to their mortgage book with the CML (Council of Mortgage Lenders)

5.1.1- Contact point if the seller has owned the property for less than 6 months.

Completions Team at office issuing mortgage instructions. See Offer for contact details.
NB We will not normally proceed on cases where the property is already owned by the borrower but for less than 6 months.
Applications which involve assignable contracts are not acceptable.

Assignable contracts, used heavily by some investors are no longer allowed by BMS. An assignable contract allows an investor to exchange contracts on a property, but sell his contract on to another investor, without buying the property. The new investor would just raise the funds and mortgage in the normal way and complete the sale.

This is a sign that BMS are becoming more and more tight with their mortgage lending. I wonder how long it will be before other lenders follow suit.

Whilst I was away I was informed that Mortgage Express, one of my favourite mortgage lenders had overnight pulled the plug on their instant remortgage product. Mortgage Express were the only major mortgage company to allow an investor to remortgage their property before owning it for 6 months. An instant remortgage product allows investors to remortgage a property to 85% of its surveyed market value. This is regardless of purchase price.

For example if you purchased a house for 60k and the surveyor agreed that the property is actually worth 100k the bank (mortgage express in this case) would lend you 85k as a remortgage on the day of completion. All you had to do would be to buy with 60k cash then the next day you would be given it back plus an extra 25k.

Of course not everybody has 60k in cash sat in the bank, this created a need for bridging loans companies to lend the cash to purchase the property for 1 day creating easy NMD (no money down) purchases. This market was very competitive with companies charging £500 to lend you up to 200k for one day. These bridging loans companies are not required as there is no decent provider for instant remortgages.

There are of course other companies who will do instant remortgages such as Natwest and The Bank of Ireland, but reports from other investors indicate that they are slow to offer and their rates are completely rubbish. Are there other ways to buy property NMD?

I’ve been absent for a few weeks as I’ve just been really busy preparing for the wedding. Now that its over and me and Sally are back from honeymoon we are still so busy and life has not yet returned to normality for us.

Here is a picture at our wedding from our friend JMAC:

It was most definitely the longest day of my life, waking up at 6am and busy busy until the end of the party at 3am.
Everythingl went to plan (Sallys plans) and it all worked out perfectly.

A picture of our honeymoon in the Maldives at sunset:

The Maldives is one of the most boring locations I have been to, perfect then for a honeymoon. Even at full capacity we could only ever spot about 10 people on the beach on our island. The very helpful and friendly staff with the ideallic surroundings and perfect weather combined do make you feel like you are in paradise.

More pictures and the full wedding story will be on my wifes (that still sounds strange) website www.sallyso.com

In the last 2 weeks or so ALL UK banks and lending institutions that I and my fellow investors use seem to have tightened their belts and repriced their mortgage products. Fixed rates have gone up as well as variable tracker rates. Arrangement fees are also still stupidly high.

Even though UK Interest rates have recently come down or stayed the same for the last few months. These latest lending rate hikes are definitely a result of the US credit crunch and is a result of less money being available to the banks to lend out.

BMS fixed rate products have gone from 3 year 5.09% rates to 2 year 5.54% rates with heafty arrangement fees of 2.5% of the loan amount (even this poor rate has today been pulled in favour of possibly an even worse product).

Mortgage Express who do instant remortgages for investors have repriced their 2 year fixed rates at 6.09% making most deals not possible for investors who need the instant remortgage product.

As it is now harder for borrowers to get decent mortgages to buy homes, this will directly reduce the ammount of sales as people cannot buy the homes they want to at todays price. The rate hikes mean that affordability will be reduced. This may in turn bring a downturn in the market. I’m a little worried are you?

I’m sorry I’ve not had the chance to post for ages. I’m currently up to my neck in wedding planning for my upcoming wedding on the 8th April.
A few weeks ago I was treated by my mates to a stag do in the Latvian city of Riga.

Riga is supposed to be like prague but a bit less developed and a bit less expensive. At least thats what we thought, but erm we were wrong, quite wrong…

The city is quite developed like most parts of Europe, but unlike most parts of Europe it doesn’t share the same prices, prices in Riga are a lot higher that most cities in Europe, being comparable to London and Paris for prices of drinks and eating out. This was quite a shock for most of us, but we still managed to enjoy ourselves and have a real good time.

Here are some pictures:

Riga Steak House

The Stag gets tied up

Olympic Taboganing in Riga

Whilst there is another PR update happening at the moment, most of my sites have not been affected. One site has reached PR4 which is very good considering I have not even promoted it much.

One of my best website marketing achievements at the moment is for the Soda Estates site. When I do a google search for “soda estates” I get the following result:

See the links underneath the listing (how we help, latest news, repossession stopped) ?
In the webmaster community a site is considered to have “authority” when it has those links. The site becomes an authoritive site. According to google however there is no such thing as an “authoritive” site. The correct name for these links is “sitelinks” as listed in Googles webmaster tools. Google adds them to a site to help the users browse to different sections of the site and these happen automatically.

They cannot be changed manually and there does not seem to be a way to influence them. This is a shame as I would not automatically choose the same links that are displayed. Whatever they are caused by they seem to be quite an achievement considering the age of the site and the relatively low content that the site has. The site still does not list too well for the keyword terms that I have chosen, but its slowly getting there.

This is an update of the eviction of my non paying tenants, the process has well and truly dragged out for ages and ages. About 5 months in total.

In court the judge had ordered that the tenants leave on Jan 23rd and give up possession of the property. The tenants had agreed and I was to meet them there on the 23rd. On the 21st I called the tenants and asked about the 23rd and they told me they would not be leaving. Great!!

I went back to court when I could to ask for the court baliff to kick them out. This cost me £95 and I had to wait for the baliff to arrange a date. When I finally got documentation through for the eviction from the baliff the date they had set was for the 18th Feb at 11am. This was nearly another 4 weeks from when the judge had ordered them out. another 4 weeks of non rent payment Grrrr!!!

Court Baliff and the Police

The court baliff will turn up with the police if you think that it will be a problem getting the tenant out. I didn’t think this was necessary and I don’t like to waste police time.

So now I had an eviction date and knew when the property would definitely be empty. So I advertised the property in the local paper at a higher rent then before as I need to recoup some losses on the £4k in lost rent. I think my bad luck on this property had turned to good luck as I recieved at least 20 calls about the property from possible tenants. It turns out that this is one of the most desirable areas to live in as the schools and town centre are both very close. I scheduled as many people to come over on the 18th as possible to view as I really wanted to let the property ASAP.

On the 18th I went to the property at 11am to see that the tenant had already left and that so people had already turned up to view the house and were chatting to the baliff. I let the baliff in and he had a quick look round to check the tenant had left. When he had checked the house I had to sign some kind of form to show that he had done his job and the tenants had left. I changed the locks on the doors and my cleaner went about cleaning the house. 2 viewings later and the property had been let, a young couple really liked the house and had put down a large deposit for the property.

I was so happy, the nightmare of the bad tenants and non rent payment is now over. I’m pretty sure these new tenants will be a good ones. They actually came from a recommendation as I already rent a house to the girls mum and another house to her older sister and her mum is acting as a guarentor. So I didn’t actually even need to advertise the property, but at least now I know that that property is in a great letting location and in high demand.

You can read my earlier posts on my first eviction court eviction and section 8 eviction and tenant eviction

We recieved some very good news last week. The planning permission that we submitted on our new property has been granted!

In October of 2007 me and The Sally bought a small bungalow in need of some work, but with a view to die for. It will be our new home for after our wedding and of course after its ready.

The house is actually a split level bungalow and if I needed to ever used the term “deseptively spacious” it would definitely be this house. From the front of the property it looks like any regular bungalow as you can see:

As its on a slope from the rear however it looks more like a regular house. The part in blue is the proposed single storey extension we plan to add:

From the side of the property you can see the extension in its full glory:

The extension is not very big at 3m X 5m but will add a decent sized dining / poker room to our house. The extension will have a balcony over the top so that we can admire our lovely garden and the view over Nottingham. We had to hire an architect to come out to survey the property and then design the extension to our needs. We had several come out to the property, but decided on the one that seemed most knowledgable regarding building regulations as he told us what is and isn’t possible.

After the outline plans were drawn they were submitted to the planning department for them to review and make a decision. This took Nottingham city planning 8 weeks which was really good considering that included Xmas and NY.

The planning department put 2 conditions on the approval of the plans.
a) The work must be started within 3 years of the decision
b) The materials used must be similar to the materials already on the property

My architech tells me that these 2 conditions are standard on every decision, so therefore no problems. The next step is to have details building plans drawn up to meet with current building regulations. My Architech is currently working on this and the plans should be ready on friday.

Many people including me before this project get confused with building regs and planning permission, they are not the same.
Planning permission is the process of getting the planning department and or your neighbours to agree that its ok for you to build your project. The planning officer will make a trip to see the site and check that it is suitable.
Building Regulations on the other hand are specific guidlines which must be adhered to (mainly for safety) when designing and building property. The building inspector will make regular checks on the build as it progresses to make sure it is safe.

My ISP Freedom 2 Surf had a major outage last week and I was without internet access for almost 3 days. Their sales guys confirmed that over 3000 users had been affected and had no internet. I only found this out after calling the sales department as I had been on hold to the technical team for over 2 hours on an 0870 rip off number!!

Crap Website, Crap Service

I thought 3000 users is a pretty major outage but its not even reported on their service status website. Talk about misleading customers. Technical support called me about 1 day after my broadband came back on, this is the conversation i had:

f2s: “hi this is Micheal from Freedom to Surf, I’m just calling to check that your broadband is working now”

dave so: “yes it is thanks, what was the problem?”

f2s: “we don’t know”

dave so: “my internet was down for 3 days and you don’t know why?”

f2s: “sorry we don’t know, I’m just calling to check its working now”"

dave so: “ok thanks for your information”

I could not believe my ears, they didn’t even no what the problem was??? I think I’ll be changing ISP’s very soon. There is no way I’m staying with a company that has downtime of 3 days and does not know why.

Goodbye Freedom to surf!!
Does anybody have any suggestions of a better ISP? I’ve heard Entanet are very good.

What do people do without the internet? being without the net for 3 days was really difficult and I really struggled to be honest. I think i’m just to used to being sat infront of my screen like a total geek for hours and hours.

The UK Bank of England has cut interest rates to 5.25% from 5.5% following signs that the UK economy is slowing down. The Bank needs to ensure that growth and inflation are balanced but the move today was widely anticipated by analysts after cuts in the US, where the Federal Reserve slashed its borrowing costs to 3% from 4.25%.

Even myself, I predicted that the prices would be falling. I should have put money on it, that the interest rates would fall in February. Well actually, maybe I did as the last 3-4 investment mortgages I took out were on variable rates so I should be slightly better off every month on these mortgages. A quarter point reduction in the rates would reduce the payments by about £25 on each of these mortgages.

Not all mortgage lenders will pass the interest rate cut onto their customers soon, limiting the cut’s impact on the economy. Some banks will not cut their rates until the 1st of the next month giving them over 20 days to make some more money from their customers.

Savers will be worst off from the interest rate cut. Most banks will pass the changes in interest paid on savings almost immediately. Isn’t that nice of them?