|
r1071987
Administrator
14 Posts |
 Posted - 28 Apr 2008 : 20:29:54
|
With Mortgage express pulling the plug on the same day bridge and remortgage effectively pulling the plug on the majority of Below Market Value (BMV) investors, some brokers and solicitors are putting forward alternative products/systems for achieving the same end result. Some are keeping their cards close to their chest hoping for an influx of business, others are a bit more open as to how the new methods could work.
One of the better options seems to be "Assignment of Contracts" The following extract is from Attwells Solicitors an Ipswich based practice who specialise in BMV property transactions.
"We have had a number of enquiries from you all on assignable contracts and whether these are mortgage lender compliant. We have therefore set out below and example and the legal structure as to how these work with a purchase buy to let mortgage offer.
Example:
A purchaser finds a distressed vendor who has agreed to sell their property which is worth £100,000 to the purchaser for a price of £85,000.
The purchaser then agrees to transfer the contract (which must be an assignable contract) with the vendor to an investor for £100,000 and therefore acts as a middle man to the transaction.
This investor is therefore entitled to apply for a purchase buy to let mortgage offer for a purchase price of £100,000.
On completion a purchase price of £100,000 is paid for the property of which the vendor receives £85,000 and the middle man receives £15,000.
The property is transferred directly from the vendor to the investor showing the purchase price paid by the investor of £100,000.
The lender will expect to see the balance of the purchase price being made up from the investors own money.
We also recommend that insolvency insurance is out in place to cover the risk that many vendors could find themselves facing bankruptcy proceedings following completion of the transaction notwithstanding the fact that the investor has bought the property for market value."
Time will tell if this proves to be a good option.
|
|
BMV News - Assignable Contracts
Forum Locked
Topic Locked
