The Property Unleashed Podcast
The Property Unleashed podcast hosted by Mark Fitzgerald is for property investors looking to build property portfolios and Businesses using different creative investing strategies as well as HMOs, Serviced Accommodation, BRRR, Flips and BTLs, We are helping others live the life they desire through Property.
The Property Unleashed Podcast
The Financial Blueprint for Flat Portfolios & Mortgage Update With Rob Peters
Rob Peters, an experienced mortgage broker, shares valuable insights on property finance strategies, including a unique approach to purchasing blocks of flats with minimal deposits. We dive into current interest rates, specialized mortgage products, and smart approaches to below-market-value properties.
• Simple Fast Mortgage specializes in property finance for investors and complex circumstances
• Residential mortgage rates have dropped below 4%, while limited company buy-to-let rates are around 4.87%
• Most specialty lenders (HMO, commercial, bridging) haven't followed the Bank of England rate cut
• A specialized mortgage product allows purchasing under-market-value properties with just 10% deposit
• Blocks of flats can be purchased at "block value" but financed based on higher "aggregate value"
• Example: acquiring a £255,000 property with just £16,850 deposit, gaining immediate equity
• Always speak with your broker before finding deals to understand options and avoid unnecessary pressure
If you want to learn more about property finance solutions or discuss your specific circumstances, you can reach Rob through the Education to Action Property community or book an appointment through the Simple Fast Mortgage website.
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In this episode we are going to be covering how you can buy a block of flats, potentially even a portfolio, using conventional funding through Rob Peters, and also let's get a market update and see what's happening right here, right now, in the financial sector, in the property world. Hello and welcome to the Property Unleashed podcast with me, your host, mark Fitzgerald. Today I am joined by a special guest. I have a resident mortgage broker. When I say a resident mortgage broker, it's because we now have a community built by property investors for property investors. If you haven't heard of it, it's called Education to Action Property education and putting that into action. It is well worth checking out. It is the most affordable way that you can go out there and become a property professional in all sorts of different strategies. Most of the times where you go and do any training, you can only do one strategy, but I now think that is a mistake. You should be learning as many different strategies as you can, so you've got the full toolkit to help you on your property investing journey.
Speaker 1:What we also have is a power team of experts in our community. Rob is one of those experts, so enjoy this episode. He doesn't just give us a market update. He's going to teach us how we can also use fundamental methods to make investing in any sort of deal achievable, even if you think, oh, I don't need a mortgage broker at the moment, I don't need funding, I don't need finance, I'm doing deal sourcing, I'm doing rent to rent. Trust me, you are going to take massive value from listening to these episodes. I hope you enjoy them as much as I enjoy bringing them all to you. But this is Behind Closed Doors. This is giving you a little sneak peek of what ETA is all about. Thanks very much, mark. Good to see you. Always good to see you, my friend, always good to see you. So I'll let you take it away.
Speaker 2:Thank you. So what I'm going to run through today is a little bit about us, a little bit why you might choose to work with us, a little bit about our mission, our services. We'll do an update on interest rates everybody's favorite topic, you know there's been some changes in that area. We'll then have a closing comment or a closing topic that we'll talk about and I'll leave with some contact details if anybody wants to reach out and discuss anything specific with us. So about us. So my company's called Simple Fast Mortgage. We established this company in 2020, and we're specialists in property finance strategy and mortgages for investors and developers both based in the UK and based overseas. We're particular specialists for more complicated circumstances, so situations that are a little bit more difficult than average property investors and developers directly fall into that category, and we cover all finance products, so all types of different mortgages and property finance solutions. We've got all those tools available to us to help people. We've done over 100 million of finance to date.
Speaker 2:A bit about me so, although this business is around five years old, I've been in financial services as an industry now for about 23 years in financial services as an industry now for about 23 years. My background is that I'm a qualified financial advisor. I used to advise on pensions and investments, business tax strategy all sorts of different stuff, including property finance, but now we only focus on property finance solutions for investors and developers and other people who are a little bit more complicated than average. I am also a property investor. I actually fingers crossed I've got a bid in on an auction today which finishes in about an hour's time, so we'll see if we're successful in that one as well. So why would you choose to work with us? Well, we're regulated by the Financial Conduct Authority, both as a firm and as an individual, and all reputable firms should really be regulated by the FCA. We've got all the tools at our disposal. So I'm a great believer that if we're advising clients and we're assessing their situation, we want to be able to use different types of solutions, different types of things, to help them on their journey. We don't want to be limited by saying, well, we only deal in this area or we're specialists just for bridging finance, so in order to do that, we've got all the finance tools that are available to help. As I've mentioned already, we're experts in more complex matters. Doesn't mean that we can't do standard buy-to-lets, residential mortgages and things like that. But we are specialists in more complex matters and it's really my background and my experience, which is a bit more diverse than your average broker, that enables us to do that to really understand how to use the tools that we've got at our disposal to the best advantage for our clients.
Speaker 2:We're a member of the Society of Mortgage Professionals, of FIBA, the Chartered Insurance Institute, the Equity Release Council, nrla, association of Mortgage Intermediates, all the big regulatory bodies, all the big players out there. We're members with them. So we're a very professional company. We've been featured in the press multiple times over the last few years. That includes the big papers, the Times, the Financial Times, the Daily Mail, the Guardian, as well as lots of other publications as well, and really what sits at the heart of what we do is that we go the extra mile. We're problem sol. What we do is that we go the extra mile. We're problem solvers at heart and we go the extra mile to deliver the right results for our clients.
Speaker 2:Our mission is to build long-term relationships with active property investors and developers to help them achieve their property goals and their financial freedom. That's the end goal for most people who are involved in property, whatever financial freedom means for them personally. They're usually looking to achieve that and we're here to understand what they're looking to achieve and help them along that journey. From a finance perspective, from a strategy perspective, we want to see people reach those goals. Some of the things that we do. So I said we do all types of property finance. So just to quantify what that is, that includes things like residential and commercial mortgages, hmo, serviced accommodation, buy to let, complex and large loans, bridging and development finance, auction purchases, second charge mortgages. Uk expat and international clients are welcome, and we also deal in personal and business insurance.
Speaker 2:So let's have a bit of an update on interest rates and what's going on in the market as a whole. Over the last month we've seen some changes. Those changes, the key items, are that Bank of England has cut interest rates by a quarter of a percent, so we're down to 4% now for the Bank of England. The caveat there, of course, is that most lenders are not linked to the Bank of England. The press, the papers would have you believe different the way that they harp on about Bank of England base rate. Now everybody's mortgage is going to get cheaper overnight. It's not necessarily the case. A bit of smoke and mirrors there, I think, but it does have an impact on the wider lending environment. It is one aspect of the things that can influence interest rates that you actually pay on a mortgage, whether that's an investment or a residential mortgage. But generally speaking, most lenders are not directly linked to the Bank of England.
Speaker 2:The other key factor that we want to look at is inflation what inflation is doing. I think inflation is up to 3.8%, as per the last update that I've seen. I just caught it briefly, I haven't read into the details, but if that's the case, then that will impact other underlying market indexes which are actually more directly linked to interest rates. So although the Bank of England could be reducing pressure, if inflation is going up, that's increasing the pressure. So we're in a bit of a strange situation.
Speaker 2:But what I've done here is I've produced a table and I'll update this table every month to show us, example, mortgage interest rates based on a property value of 300,000, borrowing 75% of that so 225,000, on a five-year fixed and an interest-only basis. Quite a mouthful. But what we're going to do is use that as a benchmark so that we can compare what's happening on a month-by-month basis. See if rates have moved up, they've moved down or stayed static. See what's happened with fees as well and how that impacts payments for all the key types of different mortgage that you might need to support that property investment journey.
Speaker 2:So these are not the cheapest, cheapest, lowest interest rates that you might ever find on the market, and I'll tell you why. That is because, generally speaking, those ones that have the really low fee I've got a really big, really low interest rate. Sorry, got a really big fee attached to them, and lenders, one way or another, will get paid right, they will get their money one way or the other. So what they'll do is they'll say look, here's a really eye-popping kind of low interest rate, but it's attached with a really big fee. What we want to do is we want to demonstrate actual, real-life products that people are going to use in reality, not looking to build lots of inquiries and hook people on an interest rate they can never use. So these are real-life things that we're actually using on a daily basis. So let's jump into it then.
Speaker 2:So for a residential purchase, mortgage rates are now below 4%. That's the big news here. For residential stuff either purchase or remortgage we're below the 4% mark, which is obviously a key item, last month. If it's green, by the way, it means it's gone down compared to last month, if it's red it's gone up compared to last month and if it's amber it stayed static. So what we can see here is that these rates for the top two lines residential purchase and residential mortgage they've reduced very slightly from last month the buy-to-let purchase and the buy-to-let remortgage. When that property is held in your personal name, the purchase has come down very slightly and the remortgage has actually gone up very slightly. But a key point on the remortgage is that the fee is actually reduced there. So in line four we can see that the fee now is £1,999. But previously it was £3,999. So although the interest rates stayed fairly static 3,999. So although the interest rates stayed fairly static, the fees reduced quite considerably.
Speaker 2:Most of us, of course, are using limited companies. These days, most modern property investors are not doing things in their personal name. So we're probably more interested in the next couple of lines to see what's happening on a limited company basis. And we can see that the rate for a buy-to-let, a standard buy-to-let purchase or remortgage, is 4.87, reduced from where it was last month, which was around the 5% or 5.1 mark. Fees are quite reasonable there as well. It's a fixed fee of 2,500 on each of those, so it doesn't matter how big the property is.
Speaker 2:Looking at HMOs and down from here, really, apart from the one green item in commercial, which has only moved very, very slightly 0.03% actually everything from this level down has stayed the same. What that tells us is that those lenders on the top are in a more competitive market. They're more likely to be influenced by things that the Bank of England does. But these lenders at the bottom the HMOs, the semi-commercial, the commercial, the bridging, the development and the second charges they're not in that highly competitive market because they're specialist lenders and they're quite distanced from what the Bank of England are actually doing, because we can see that all their rates have pretty much stayed static and there's no real change there. So hopefully that gives you a little bit of insight into what's going on in the market.
Speaker 2:Let's move on from there and talk about our closing comment. So what I'd like to do is, every month I'd like to just talk a little bit about a particular subject that might be of interest to investors or developers, something that is key at the moment, or something you should have in your toolkit, something you should be aware of. And this particular item is talking about under market value solutions, so below market value properties. Now, everybody's looking for a property that's under market value. But when you actually find that property that's under market value, it's very hard to. The reason why that is is because most lenders will base the purchase price of that property on what you're actually buying it for. So if you were buying a property that was, you'd agreed a purchase price with the seller of 100,000, let's say, and you're going to rent this property out, it's going to be a buy to let, but it's a fantastic deal and it's actually worth 150,. Well, the lender is going to use the 100,000 purchase price as the value and require that you put in a 25% deposit based on that 100,000. So 25,000 pound deposit. But ideally you don't want to do that because you've got all that value in the reduction from the market price, the market value compared to the purchase price. You can't really use it at that point in time if you want to go straight to mortgage.
Speaker 2:So historically, the solution here has been a bridging loan and that's what people have done. So for that 100,000 purchase. What they do is they take out a bridge. They put that deposit in at the beginning, or the bridging lender might allow them to borrow a higher amount, so the deposit is actually less, and they just use the bridge as a stepping stone just to break the chain and then go straight into the mortgage as quickly as possible, providing no works are needed to upgrade or refurb the property. But then go straight into the mortgage and now the mortgage lender because you've already purchased it and it's a remortgage they'll use the current value. They'll send a value out and say well, what's the actual market value of this? Because there's no purchase price involved now. So it's just a chain breaker. So it's a really good way of doing it to achieve the end result.
Speaker 2:But the downside is of that it's really cost. Bridging loans have got higher fees and costs. They've got legal fees, they've got valuations and then guess what? You're going to go do all that again when you do a mortgage and when you move off onto that mortgage and you're only using it for a stepping stone. You don't really need the bridge for any other reason, unless you really need to execute the purchase really fast. So the good news is that we've now got a mortgage lender fast. So the good news is that we've now got a mortgage lender there's just one, but we've got a mortgage lender who will allow a purchase with the valuation based on the current market value, regardless of the purchase price.
Speaker 2:This avoids the need for a bridging loan. So what that means is that you can borrow up to 90% of the purchase price, subject to a cap of 75% of the market value. This means that as little as a 10% deposit would be required to buy a property. The downside the upside is that the very little deposit is required. 10% deposit is great. The downside is that that equity that you've earned in this deal is generally left in the deal. You're not releasing it, whereas if you did the bridge and then the remortgage, you could potentially pull out more money immediately, although going down that route, the fees and the costs will eat some of that money. So it's got to be a good deal With this solution. It keeps costs very low.
Speaker 2:You're not doing a bridge, just going straight to mortgage low deposit, very, very easy to access, but the equity stays in there and it stays in there until you remortgage away to a new lender, which could be at the end of the fixed rate term, or it could be in a 12 months time or a couple of years time, subject to any exit penalty to come out of years' time, subject to any exit penalty to come out. But you've got that in your portfolio still building the wealth, so let's look at how that actually works then. So let's say so the minimum loan amount is 100,000, right, so the value of the property has got to be realistically around 110,000 upwards as a minimum. Your interest rate is going to be 6.5, and it's got a 5% fee added. Now the interest rate is higher than the market average and the fees on the higher side, but you're getting a low deposit. It's really easy to access.
Speaker 2:There's a pro and a con there. There's a give and take. It's got to be genuinely under market value. So what I mean by that is you can't go and right, move, find a property and go oh, this property is for sale for 100 grand. I think it's worth 120. Let's do this as under market value. There's got to be a bit of narrative as to why that property is under market value, how you've accessed it. So maybe you've linked in with an off market purchase, maybe you know the vendor and he's got an inheritance tax bill to pay. Maybe there's a divorce and there's a settlement that's needed. Maybe there's a health issue, whatever it might be. There's got to be a bit of a narrative around that to explain why he's selling the property under market value. And then, what's more, a surveyor has got to go out and agree with you. They've got to go and say, okay, yeah, I agree that this property is worth this amount. So let's give you an example on this.
Speaker 2:And this strategy works really well for blocks of flats, particularly. That's what it works really well for, and I'll tell you why. Because there's two ways that you can value a block of flats. The first way is that let's say there's four units in there. You can value it as a whole block. How much is that block worth of four flats? Easy for me to say If it was sold to an investor as a whole unit. That's one value. That's called a block value. The second way that you can value it is looking at it from an aggregate value, and that means that you're looking at each flat individually. So if those flats are all a nice size, they've all got their own individual utilities, their own gas, their electric, their own council tax, their own access through a communal hallway, then those flats could be sold to first-time buyers, couldn't they? Or somebody else who wants to live there? That means that they will be suitable to be valued individually and then add it all up at the end and quite often you get a higher value by doing that.
Speaker 2:So what we see investors using this particular tool for quite a lot is getting a block of flats, buying it from the seller based on the block value, but us valuing it based on the aggregate value, and this is what this example is here. So in this example, in the last line, we've got a purchase price of 168,500. The split value, or the aggregate value, is 255. So the deposit that the investor needed to buy this was only 10% 10% of 168,500, that's how we access it 16,850 to buy this block of flats worth 255,000. The equity gained straight away nearly 100 grand into the portfolio. Remortgage later on pulls out another 39,600. The net position after that would be all money out plus 22,750. And that even accounts for the extra fees that you would pay to exit the mortgage, the exit fee, the extra fees that you would pay to exit the mortgage, the exit fee.
Speaker 2:So, as you can see, this is a really good solution that can be applied not in all circumstances, but definitely it's one to have in the toolkit. Be aware that, okay, we've got a property here. It's potentially under market value. There's a good reason why there is a solution to that. I can't remember all the details of it, but I know who can, and then we can have a conversation around that. So that's pretty much it for me.
Speaker 2:So here's our contact details. If you want to reach out to me, you can find me in the community. You can ask us any questions in there. Tag onto the posts. We're posting content in there daily now, hopefully, of items which are of interest to everybody. Any feedback on that or anything else that people want to see or want us to talk about, let me know. If anybody wants to discuss anything individually about a deal, about products, whatever it might be, our contact details are there and you can find us on all the main social media channels as well. If you want to go and book an appointment with us, which we've had a few people asking in the community how do I book an appointment? Best way to do that is either use that QR code or just go onto our website and there'll be a inquire now or contact us button and you can go through there and after you've put your contact details in, it'll take you to a page where you can just book a slot straight into the diary. There's that option for you as well.
Speaker 1:Thanks very much, mark. That's it for me. Amazing Rob, amazing Rob. So we don't just get a market update here, we get a lesson as well, and I have to say that is a brilliant one.
Speaker 1:Looking at the block of flats and things and I know a lot of people are interested in how can I do these sorts of deals and things, because financially, we're always worried that where can we add the value? Obviously, it's got to be below market value, but also, how can we fund these sorts of deals? And you know, using rob, using his company and his team and everything to help you with this is a very, very smart move. It's all about having the right power team at your disposal. So, um, I've got a quick question as well.
Speaker 1:I was sort just saying because there's a lot of people that will be sat on the fence thinking I need to find the deals and then I'll speak to you, rob, but I always think that's going a bit backwards. I think what you should do, maybe, is to speak to you first to see how your circumstances are and the sort of things that you need to be doing to be able to make sure that you sort of tick the boxes. Isn't it to qualify for a lot of the different financial sectors out there and different financial solutions, for want of a better word. So for people that are sort of sat on the fence, that are thinking, well, I'll find a deal and then I'll speak to Rob, what would you say?
Speaker 2:Yeah, so absolutely. I much prefer to talk to people before they've actually found the deal, and the reason for that is that it makes everything a lot less stressful for everybody. For a start, because what happens is when you find a deal, everybody wants all systems go right. If it's through an estate agent or whoever it's through. They want solicitor's details, they want action, they want valuations, instructing, they want to know. Applications are in for lenders and you've got to go frantically kind of cobble together who you're going to use and put all that paperwork together and there's a lot of stress and unnecessary pressure around that. Also, you're never going to be 100% sure exactly what you can get, what the finance looks like and everything else. So how do you actually stack that deal up accurately if you don't know that stuff? So it's much better really if we link in with people before they find the deal. It takes away all that unnecessary pressure, and I'll give you an example.
Speaker 2:So we've got many clients who want to use bridging finance to do things such as HMOs. Maybe they want to do development. They're quite complex finance, especially if you've not used it before. There's lots of things that are happening, lots of potential fees, lots of things you need to know about in the process. You don't really want to be trying to absorb all that when you're trying to get the deal done as well. What you want to do is absorb all that in advance. So what we'll do is well, we know they're looking for HMO, we're looking in this area, they're going to buy at approximately this price range, with approximately this sort of cost of works and approximately this sort of end result. So we just kind of mock it up and we talk through what it would look like so that they can then say this is how the finance works, get all the questions out of the way, get an understanding of what's going to happen so that when they do find the property A, they can be really confident in how to stack it up using real life numbers and any of the fees and bits and bobs that are involved. And, b, all the questions and everything are done and dealt with and they're ready to kind of push forward quite confidently.
Speaker 2:So if anybody's in that situation, maybe they don't even know what solution they need or where they're at. You know I'm giving my time as part of being a member in this community. Everybody's got access to me for an hour. You can book a call in. There's no prerequisite to do that. Don't be worried. If you don't know about finance, you don't need to. You need to know all these things before we have the conversation. You know that's. That's kind of our job to do that.
Speaker 1:Amazing, amazing. Well, I'm going to let you go off now and enjoy the weather, because you are abroad at the moment and it's working from abroad, so I won't take up any more of your time. I would like to thank you, on behalf of the community and everything, for all of your help, support that you offer us. You know your updates that you put in there as well. You really do keep everybody in the know when it comes to all of these things and, of course, you help us by furthering our education as well. So enjoy the rest of your time away, my friend. I look forward to seeing you when you get back, and thank you ever so much for your time today, mate.
Speaker 2:Thanks very much. Thanks for having me, mark, take care.
Speaker 1:See you all later, see you soon, buddy Cheers, bye-bye.