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Our News
28/04/2008
: BMV News - Assignable Contracts
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.
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.
Other News
 
|
Buy-to-let flat loses £95,000 in value | ||||
| A porperty investor who bought a flat for £175,000 last year is facing a negative equity nightmare after its value fell by almost 50% |
 
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Prices for the super-rich soaring upwards | ||||
| With an average value of £20m per flat, how will the credit cruch effect One Hyde Park, London's most expensive apartment complex? |
|
Prices for the super-rich soaring upwards | ||
| With an average value of £20m per flat, how will the credit cruch effect One Hyde Park, London's most expensive apartment complex? |
|
Buy-to-let flat loses £95,000 in value | ||
| A porperty investor who bought a flat for £175,000 last year is facing a negative equity nightmare after its value fell by almost 50% |
 
|
House prices fall £11,500 in a year | ||||
| House prices are falling at their fastest rate since the depths of the early Nineties housing crash - down £11,500 in a year |
|
House prices fall £11,500 in a year | ||
| House prices are falling at their fastest rate since the depths of the early Nineties housing crash - down £11,500 in a year |
 
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Rics: First-timers shouldn't pay stamp duty | ||||
| First-time buyers should be exempt from stamp duty, housing experts claim in a plan that would see all home purchases under £1m pay less tax |
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Rics: First-timers shouldn't pay stamp duty | ||
| First-time buyers should be exempt from stamp duty, housing experts claim in a plan that would see all home purchases under £1m pay less tax |
 
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BoE: Mortgages for homebuyers dive 64% | ||||
| Mortgages for home purchases have plummeted by 64% over the past year - hitting lower levels than during the 1990s house price crash |
 
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Prices falling in all but two London boroughs | ||||
| The average London house is worth £11,500 less than it was a year ago, figures from house price monitor Hometrack show |