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Same-Day Remortgage Explained · The Property Unleashed Podcast

• 0:11
  SPEAKER_01: Hello and welcome to this month's financial update with our resident specialist, Mr.
• 0:17
  SPEAKER_01: Rob Peters from Simple Fast Mortgage.
• 0:19
  SPEAKER_01: Great to have you on, Rob.
• 0:20
  SPEAKER_01: Always good to see you, my friend.
• 0:22
  SPEAKER_01: How are you?
• 0:23
  SPEAKER_01: I'm very good, Mark.
• 0:24
  SPEAKER_01: I'm very good.
• 0:25
  SPEAKER_01: How are you?
• 0:26
  SPEAKER_01: I'm very well.
• 0:26
  SPEAKER_01: I'm very well.
• 0:27
  SPEAKER_01: So I'm excited to see what's been happening in the financial sector.
• 0:31
  SPEAKER_01: And I always love your top tips and final thoughts as well.
• 0:34
  SPEAKER_01: So I'll let you take it away, my friend.
• 0:35
  SPEAKER_00: So what I wanted to talk about a little bit was same-day remortgage.
• 0:40
  SPEAKER_00: It's a really kind of hot buzzword at the moment.
• 0:43
  SPEAKER_00: Lots of people are talking about same-day remortgage and it's kind of banding about.
• 0:48
  SPEAKER_00: So I just wanted to run through that, explain what it is, when you might use it, how it works, that sort of thing.
• 0:56
  SPEAKER_00: So same-day remortgage or a day one remortgage, as it's sometimes called, those terms are basically mortgage speak terms.
• 1:04
  SPEAKER_00: They're terms that we would use as an industry, but not necessarily how we communicate with clients.
• 1:10
  SPEAKER_00: But what that means, a same-day mortgage or a day one remortgage, is that we're going to remortgage a property that we own within the first six months of ownership.
• 1:20
  SPEAKER_00: That's what it means.
• 1:21
  SPEAKER_00: It doesn't actually mean the same day.
• 1:24
  SPEAKER_00: And it definitely doesn't mean that you apply for a mortgage at the morning when you're having your breakfast and it gets approved in the afternoon when you're having your dinner, because that doesn't happen, right?
• 1:34
  SPEAKER_00: But what we're saying here is that we've got a property we own and we're going to finance it within six months of ownership.
• 1:41
  SPEAKER_00: Now, historically, this used to happen all the time, right?
• 1:44
  SPEAKER_00: So pre-2007, people built huge portfolios off doing this.
• 1:49
  SPEAKER_00: And what they would do is they would go out and acquire properties.
• 1:52
  SPEAKER_00: Property prices were crazy.
• 1:54
  SPEAKER_00: They were going up every week, not even every month.
• 1:56
  SPEAKER_00: You know, things were getting revalued.
• 1:58
  SPEAKER_00: And they would buy something today and refinance it in a couple of months' time and pull money out of it or re-leverage it with the bank and say, Well, I want to buy these other couple of properties.
• 2:08
  SPEAKER_00: But obviously, these two properties that I bought two months ago have now gone up in value so much that I want to use the, you know, use extra capital there as deposits.
• 2:17
  SPEAKER_00: And, you know, people built really big portfolios off back of that.
• 2:20
  SPEAKER_00: But we all know how that story ended, right?
• 2:22
  SPEAKER_00: People were really over-leveraged and it caused uh it caused a bit of an issue in the market.
• 2:28
  SPEAKER_00: And then when the property bubble burst and prices went down, there was a lot of negative equity because of the leverage and now it revert.
• 2:36
  SPEAKER_00: So it disappeared for the large part.
• 2:39
  SPEAKER_00: Now I won't say it disappeared in full, but most lenders weren't doing it.
• 2:44
  SPEAKER_00: There were still one or two lenders out there who would allow a same-day remortgage, but most of the lenders weren't allowing it.
• 2:52
  SPEAKER_00: And those lenders who were allowing it were insisting that you did work to the property.
• 2:57
  SPEAKER_00: So there had to be a material change.
• 2:59
  SPEAKER_00: They were still avoiding you buying a property today, doing nothing to it, and then refinancing it within the six months and saying it's gone up in value because they were keeping away from that.
• 3:11
  SPEAKER_00: Now, if you did material work to it, so you know, you you did a refurb or you built an extra bedroom or you converted it or something where you put cash in, then that was different.
• 3:22
  SPEAKER_00: That would that would then kind of trump this six-month rule.
• 3:25
  SPEAKER_00: And they would say, okay, well, you can prove that, then we're happy to revalue it based on what we think it's worth now.
• 3:31
  SPEAKER_00: Let's let's go for that.
• 3:33
  SPEAKER_00: But what's happened over the last couple of years is that there are some lenders that have returned to same-day mortgage or day one remortgage and allowed people to refinance their properties within six months without doing any work.
• 3:47
  SPEAKER_00: And in its most extreme format, you can effectively remortgage the property as soon as you buy it or or at the same time as you're buying it.
• 3:58
  SPEAKER_00: So let's think about that.
• 4:00
  SPEAKER_00: So what we're saying is we can do it within the first six months of ownership.
• 4:03
  SPEAKER_00: Well, actually, we could do it on the first day of ownership.
• 4:06
  SPEAKER_00: Yeah, that's the most extreme version of this.
• 4:09
  SPEAKER_00: And that kind of offers opportunities for investors because if you're buying something that's maybe below market value and you know you're you're acquiring it today, and then your mortgage completes today as well, or tomorrow, then you might be pulling out more funds and getting your cash back a lot quicker.
• 4:30
  SPEAKER_00: And it's just reducing the amount of time that you have your cash outlaid.
• 4:34
  SPEAKER_00: Now, as I said a little while ago, this doesn't mean you apply for the mortgage in the morning and it gets approved by the afternoon.
• 4:40
  SPEAKER_00: What it actually means is that we're applying for the mortgage at the same time that the purchase is going through, and we're just lining things up ready, getting all that legwork and stuff done way, way in advance, so that where now a purchase actually does complete, it might be a cash purchase, it might be using bridging finance, something like that.
• 5:00
  SPEAKER_00: After that's completed today, we can actually kick in with the mortgage straight away and get funds back, which is a really good opportunity.
• 5:08
  SPEAKER_00: And what's happened, as I said, is there's a few more lenders doing this now, and some of those lenders will not insist that any work's done, because obviously not going to do works really in one day anyway, but they'll just value it on the market value, whatever it is, which is really good for below market value transactions.
• 5:27
  SPEAKER_00: So, why do investors use them?
• 5:28
  SPEAKER_00: So, like I mentioned, cash purchases, bridging, auctions, fast completions, all that kind of stuff can filter into this kind of same-day mortgage.
• 5:38
  SPEAKER_00: It's all about the deal, not necessarily where it's coming from.
• 5:42
  SPEAKER_00: So, if you're thinking about the deal, why would I want to remortgage it really quickly after buying it?
• 5:48
  SPEAKER_00: Well, it's to pull the money back out that we've put in it.
• 5:52
  SPEAKER_00: So it means that either we're buying it under market value, or we've done some sort of work on it in that time period.
• 6:02
  SPEAKER_00: Yeah.
• 6:02
  SPEAKER_00: And it could be, you know, that maybe there's been some sort of agreement in place with the owner, you know, maybe some sort of option or whatever, delayed completion or something where you've done the work while you're actually buying it, and maybe it's just a quick refurb and you've done that, and we don't have that time delay of buying the property and then doing the work.
• 6:22
  SPEAKER_00: We just want to refinance it quickly.
• 6:24
  SPEAKER_00: It could be that you've bought it for 100,000 and actually it's worth 150, and we want to remortgage it and pull out all the initial money that we've put in without waiting six months and having all our capital tied up.
• 6:35
  SPEAKER_00: You know, that's a really good way that this can be used.
• 6:38
  SPEAKER_00: I use this myself, I'm using it now, and I've I've done it before in the past as well, where I've bought a flat quite cheap, it was about 80,000, and it was valued at 135 by the mortgage lender before I'd actually purchased it.
• 6:52
  SPEAKER_00: So I was doing lining up the mortgage as I was going through the legals, and then after my cash purchase completed, my mortgage was ready to go.
• 7:00
  SPEAKER_00: I completed on the mortgage pretty much straight away within a few days, got all my money back out, but I didn't do any work to the property or anything like that.
• 7:09
  SPEAKER_00: So we've talked about some of these already.
• 7:11
  SPEAKER_00: The six-month ownership rule, why some lenders restrict?
• 7:14
  SPEAKER_00: We know about that now.
• 7:14
  SPEAKER_00: It's all to do with the credit crunch and over-leverage and that side of things.
• 7:19
  SPEAKER_00: Purchase price versus current market value.
• 7:22
  SPEAKER_00: So that's what we've talked about here.
• 7:23
  SPEAKER_00: Are you buying it under market value or are you gonna add value to it and change the value and do that quite quickly?
• 7:32
  SPEAKER_00: How you can then use it to recycle your capital and recover deposits quickly.
• 7:37
  SPEAKER_00: Yeah.
• 7:38
  SPEAKER_00: So it's a really good way of doing that.
• 7:40
  SPEAKER_00: That's really the core of this is getting cash to move faster and do more.
• 7:46
  SPEAKER_00: Why has the property value increased?
• 7:48
  SPEAKER_00: So refurbishments are easy.
• 7:51
  SPEAKER_00: Loads of lenders will be happy if you've refurbed the property and you want to remortgage it within six months.
• 7:57
  SPEAKER_00: If you've added value to it in some way, that's fine.
• 7:59
  SPEAKER_00: Not an issue at all.
• 8:01
  SPEAKER_00: The issues really about this buying below market value, lease, title improvements, etc.
• 8:07
  SPEAKER_00: Things that are that that where you've not put cash in, but we know there is an intrinsic value there, that's where the real opportunity is here to do that kind of straight away.
• 8:18
  SPEAKER_00: Evidence we've needed.
• 8:20
  SPEAKER_00: So if you have done works to it, we might need to get some evidence of that.
• 8:23
  SPEAKER_00: It might just be a schedule of what you've done, right?
• 8:26
  SPEAKER_00: You could just say to us, well, look, this is what we've done roughly.
• 8:28
  SPEAKER_00: We've put new kitchens and bathrooms in, we've decorated new floors, some new plumbing, whatever it might be, and that's cost us approximately this amount.
• 8:37
  SPEAKER_00: Yeah.
• 8:39
  SPEAKER_00: Bridging finance and the importance of having a credible exit strategy.
• 8:42
  SPEAKER_00: So bridging finance could be a really good tool for this, particularly in the below market value side of things.
• 8:48
  SPEAKER_00: Because if we imagine that we're going to buy a property for 100,000 and it's worth 200, right?
• 8:53
  SPEAKER_00: Just for argument's sake.
• 8:54
  SPEAKER_00: Yeah.
• 8:55
  SPEAKER_00: If you find that deal, do let me know because I'll take it.
• 8:58
  SPEAKER_00: But let's just say it's you're buying it for 100 and it's worth 200.
• 9:03
  SPEAKER_00: When we get a bridge on that, we can probably bridge all of it.
• 9:06
  SPEAKER_00: Yeah, or at least 90% of it, right?
• 9:09
  SPEAKER_00: So you're not going to put very much deposit in there at all, you know, if any, you probably have some legal costs to pay and some maybe evaluation fee, possibly, right?
• 9:18
  SPEAKER_00: But there's not going to be very much deposit needed, if any, at all.
• 9:23
  SPEAKER_00: But what we want to do then is we want to then get the mortgage lender to value it based on the market value of 200.
• 9:30
  SPEAKER_00: If we went straight to a mortgage in the beginning, the mortgage lender would say, well, you're buying it for 100.
• 9:36
  SPEAKER_00: So we're going to base our mortgage on 100, and you've got to put a 25% deposit in, 25,000.
• 9:42
  SPEAKER_00: So we can't go to the mortgage lender straight away.
• 9:44
  SPEAKER_00: We kind of have to break the chain.
• 9:46
  SPEAKER_00: So we could do that with a bridge in this instance and probably end up with no deposit, and line up the mortgage so that it completes immediately after the bridge is completed, or very soon after, you know, on the basis there's no work to do.
• 9:59
  SPEAKER_00: And the mortgage lender is then going to value it based on 200, if that's the market value, and they're going to say, well, you can have 75%, which is 150 grand.
• 10:08
  SPEAKER_00: Well, that 150 grand, 100 of it pays the bridge off, and actually there's 50 grand extra in this example because it's a really fantastic deal.
• 10:16
  SPEAKER_00: And that's that's really how bridging finance can work here.
• 10:20
  SPEAKER_00: It can be a really good tool to limit the amount of cash that you outlay for below market value properties.
• 10:29
  SPEAKER_00: Uh, main risks really is around valuations, and that's always the case, I think, regardless of what strategy you're doing, wherever you're adding value to a property and you're looking to revalue it later, pretty much your entire strategy and deal is going to hinge on what that valuer does, right?
• 10:47
  SPEAKER_00: And if the value comes back and says, Oh no, I think it's worth much less than you, you do, or I think the rental income is going to be much less than than you've assumed, then that's probably going to cause some sort of some sort of friction, right?
• 10:59
  SPEAKER_00: Some sort of issues gonna exist there where you're maybe gonna get less mortgage or or or something like that, which could cause a problem with the deal.
• 11:08
  SPEAKER_00: So valuations are really important, right?
• 11:11
  SPEAKER_00: And what we often want to do when we're involving multiple valuations is apply some consistency.
• 11:19
  SPEAKER_00: What we can't do is guarantee that you're gonna get a certain value, but what we can do is give you some tools to reduce the risk of a rogue valuation.
• 11:27
  SPEAKER_00: And one of the things we might do that that helps with that is we're getting a valuation for the bridge lender, maybe, right?
• 11:34
  SPEAKER_00: So let's use this surveyor who are good and know and understand this type of property, and then we're gonna get a valuation for the mortgage lender.
• 11:40
  SPEAKER_00: Maybe we can use the same surveyor, right?
• 11:42
  SPEAKER_00: Because they've already given us that value once, much less risk that they're gonna come back and go, oh no, I totally disagree with what I said myself three months ago, right?
• 11:51
  SPEAKER_00: Much less risk.
• 11:52
  SPEAKER_00: But two different valuation firms, look, a lot more risk.
• 11:55
  SPEAKER_00: That's one of the things.
• 11:56
  SPEAKER_00: There's a lot more to it, but there are things that we can do to help reduce the risk there.
• 12:01
  SPEAKER_00: Rental stress tests again mentioned, it's it's just about how much rent's gonna come through.
• 12:05
  SPEAKER_00: The rent also dictates how much you can borrow, not just the value.
• 12:09
  SPEAKER_00: That's an important factor.
• 12:11
  SPEAKER_00: And delays, right?
• 12:13
  SPEAKER_00: Delays can always impact on things, and and and we can't always control those delays where third parties are involved.
• 12:18
  SPEAKER_00: But the key message here is plan the refinance before you complete the purchase, not after.
• 12:24
  SPEAKER_00: So if you're buying below market value or you're thinking I want to refinance within six months, I want to add value and do work.
• 12:30
  SPEAKER_00: It's always, always a good idea to be looking at that exit strategy and saying, okay, well, once I do this, what's it gonna be worth?
• 12:37
  SPEAKER_00: What rental income am I gonna get?
• 12:39
  SPEAKER_00: Yeah, what am I gonna use the property for?
• 12:41
  SPEAKER_00: Am I gonna use it for social housing with a spurious provider?
• 12:46
  SPEAKER_00: Then let's check that provider's okay, they're gonna work, the lenders are gonna accept them, they're happy with the contract, all this kind of stuff before it's signed up, right?
• 12:55
  SPEAKER_00: Not after it's signed up and we've got a problem and then we have to fix it, but before.
• 13:00
  SPEAKER_00: And this is all about forward planning.
• 13:02
  SPEAKER_00: So think about the exit, think about the refinance, and get a good strategy in place in advance, not when the actual item is to hand.
• 13:12
  SPEAKER_00: And that's pretty much it for this month.
• 13:14
  SPEAKER_00: So if you'd like to connect with us on social media, very much appreciate that, particularly your comments.
• 13:20
  SPEAKER_00: You know, if you see our posts or you see us talking about something that that's of interest, or you see something that's added value, or you think it's a load of rubbish, tell us on the post, right?
• 13:30
  SPEAKER_00: Put a comment on there, give us a like, follow us.
• 13:32
  SPEAKER_00: It all helps get the message out to more people.
• 13:36
  SPEAKER_00: If you want to book a call in with me to discuss a deal, to discuss what you do next, uh, just to talk about, you know, you've got no clue and you want to get started.
• 13:44
  SPEAKER_00: There's the QR code on there.
• 13:46
  SPEAKER_00: You can also add me into your phone.
• 13:48
  SPEAKER_00: We're on email and on the website, there's a contact form where you can drop us a note as well.
• 13:53
  SPEAKER_01: Amazing.
• 13:54
  SPEAKER_01: Always amazing.
• 13:55
  SPEAKER_01: I love those final thoughts as well.
• 13:56
  SPEAKER_01: It's interesting seeing the interest rates, you know, they're going up a little bit, but not anything massive.
• 14:01
  SPEAKER_01: So let's just hope that they level off there and maybe drop back down again.
• 14:04
  SPEAKER_01: It seems to you know, ebb and flow, doesn't it, all the time?
• 14:07
  SPEAKER_00: Yeah, it's always moving, isn't it?
• 14:09
  SPEAKER_00: And just because the deal works today doesn't mean it works, you know, in a couple of years' time, and that's where your stress test comes in.
• 14:15
  SPEAKER_00: So even if interest rates are like, you know, five percent now, no guarantee they're gonna be five percent in five years.
• 14:22
  SPEAKER_00: So you know, you've got to have some sort of criteria in your stacking sheet to say, well, what happens if they go up in the future?
• 14:30
  SPEAKER_00: Does that deal still work?
• 14:32
  SPEAKER_00: Now, on average, most investors probably taking five-year fixed rates because mortgages are too expensive to take a two-year one, the fees are too high, it just doesn't work.
• 14:43
  SPEAKER_00: So mostly taking five-year fixed rates.
• 14:45
  SPEAKER_00: So you know that for five years your rate's fixed, you've got that security of knowing what the payment is, but after five years, hopefully rents have gone up as well.
• 14:55
  SPEAKER_00: So you can factor that in as a plus point, but you should probably factor in well, what happens if interest rates have gone up?
• 15:01
  SPEAKER_00: How much might they go up by?
• 15:02
  SPEAKER_00: You know, where what do I want to test my portfolio or my purchase by?
• 15:07
  SPEAKER_01: Definitely, definitely.
• 15:08
  SPEAKER_01: And and the sort of same-day remortgage, fascinating stuff, that is.
• 15:13
  SPEAKER_01: So, just a couple of questions on that.
• 15:15
  SPEAKER_01: If if you had, as your example was, you you you managed to negotiate a property,£100,000, should be worth about 200k, maybe it's in a good condition, but they just need a quick sale.
• 15:24
  SPEAKER_01: If you were then hypothetically going to then say, right, well, we'll bridge this to get a quick sale out of the way, what as the investor would you need to have to make sure that that happens?
• 15:33
  SPEAKER_01: What would the bridging providers or I know they're all a bit different, but on average, what would you say that capital that they need to have to be able to get that to move forward quickly?
• 15:42
  SPEAKER_01: Yeah.
• 15:43
  SPEAKER_00: So the the the first thing obviously is let's let's have a chat and run through the deal and make sure it all works.
• 15:48
  SPEAKER_00: But in terms of deposit, in that example, it's really, really below market value.
• 15:53
  SPEAKER_00: Obviously, that would be an amazing deal if you could find it, right?
• 15:56
  SPEAKER_00: What we're gonna know is why.
• 15:58
  SPEAKER_00: Why is it below market value for that amount?
• 16:00
  SPEAKER_00: And what lenders are concerned with primarily is is the seller vulnerable or under some sort of duress, right?
• 16:07
  SPEAKER_00: That's what they're worried about.
• 16:08
  SPEAKER_00: If there's a legitimate reason we can tell a story, they just need a quick sale because, you know, XYZ reason, then that's fine.
• 16:16
  SPEAKER_00: We're okay with that.
• 16:17
  SPEAKER_00: That's as far as we're digging into it, but we do need some sort of reason.
• 16:20
  SPEAKER_00: So that's really important.
• 16:21
  SPEAKER_00: In terms of like cash and and and costs and things, in that example, because it's such a great deal, we could probably bridge all of the purchase.
• 16:29
  SPEAKER_00: So we could probably get 100,000 net in hand to make that purchase without needing to have any sort of deposit.
• 16:37
  SPEAKER_00: If the deal wasn't quite as rich, you know, if it was maybe worth 150 grand, something like that, and you're buying it for 100, then again, we might be able to get most of it.
• 16:49
  SPEAKER_00: But worst case kind of scenario, you'd probably maybe have a 10% deposit or something like that that you'd need to put in.
• 16:56
  SPEAKER_00: But there are some cash costs that you're gonna have.
• 16:58
  SPEAKER_00: So even if you bridge 100%, probably still have some fees to pay along the way.
• 17:04
  SPEAKER_00: Now, if we need a physical valuation, so we need a surveyor to actually go out to the property, then there's gonna be a cost for that.
• 17:13
  SPEAKER_00: So a hundred grand kind of buy to let property, you're probably looking at you know, 500 quid to 800 pounds for a survey, something like that.
• 17:22
  SPEAKER_00: If it's a more complex property, you know, HMO or a multi-unit block or something, the cost of a survey is probably gonna be more, probably like 1,500 to 2,000 pounds for a survey.
• 17:32
  SPEAKER_00: You're gonna have to pay for that, right?
• 17:33
  SPEAKER_00: That's gonna come out.
• 17:35
  SPEAKER_00: If it's a really good deal, we can always increase the bridge to pay for costs, but you're still gonna have to put the money out for the valuation first before it comes back when the bridge completes, right?
• 17:44
  SPEAKER_00: So you still need to have a bit of cash flow.
• 17:47
  SPEAKER_00: You might have some legal costs, right?
• 17:49
  SPEAKER_00: The lender might say, Well, I want you to pay our legal fees.
• 17:52
  SPEAKER_00: You know, that could be a thousand pounds to 1,500.
• 17:56
  SPEAKER_00: The lender might be happy to use your solicitor or might not have any legals, right?
• 18:00
  SPEAKER_00: There are some options around that as well, but but yeah, you might have that.
• 18:04
  SPEAKER_00: And then you might have your own solicitor as well.
• 18:06
  SPEAKER_00: Now they'd usually get paid at the end when the property completes.
• 18:10
  SPEAKER_00: So again, you know, I've just spoken to a client this morning and we need to raise some money on a bridge.
• 18:15
  SPEAKER_00: He hasn't got a lot of cash in the bank at the moment, and we're gonna need some funds, probably about£5,000 for various costs and things.
• 18:23
  SPEAKER_00: So, what we're gonna do is we're gonna raise the extra£5,000 on the bridge.
• 18:27
  SPEAKER_00: So we will have to pay about£2,000 of that up front, but the rest of it comes out on completion.
• 18:33
  SPEAKER_00: The solicitors get paid the bulk of their money on completion, so it can come out of the bridge, and we could do that with this example as well.
• 18:40
  SPEAKER_01: Right, okay, cool.
• 18:41
  SPEAKER_01: No, that's really good, really good, really interesting stuff.
• 18:44
  SPEAKER_01: And if you've I mean, obviously, like we both know at the moment, as as probably a lot of people watching and listening to this, know that the market's quite slow at the moment.
• 18:51
  SPEAKER_01: So there are some great deals to be had out there for people that just, you know, they they've used their properties, they've made their money from their properties, they just want to get rid of it now, get rid of that hassle, they want to have the money sat in their bank account rather than you know in an empty property.
• 19:05
  SPEAKER_01: Yeah, and finding properties that are potentially, you know, 25, 30 percent below market value, you know, it's a numbers game as we all know, but it is achievable.
• 19:13
  SPEAKER_01: And if that was the case, and obviously you could add a little bit of value to them as well, maybe it's a little bit tired and things.
• 19:19
  SPEAKER_01: What would you say?
• 19:19
  SPEAKER_01: Because a lot of people starting out will be looking at, you know, your beginner sort of HMOs or your buy to let sort of things as well.
• 19:26
  SPEAKER_01: What would you sort of say for people that can find something below, you know, 30%, let's say, below market value?
• 19:32
  SPEAKER_01: What's sort of traditionally would be a good system or route for them to take, in your opinion?
• 19:37
  SPEAKER_01: Now, I know there's a lot of different variables with that.
• 19:39
  SPEAKER_01: This is just hypothetical, it's just to give people an idea.
• 19:44
  SPEAKER_00: Yeah, so if it's sort of 25-30% below market value, then effectively what we want to do is is probably in most cases limit the amount of cash that you're putting into it or pull the cash back quickly afterwards.
• 20:01
  SPEAKER_00: And and which one's more important will depend on the person's situation.
• 20:06
  SPEAKER_00: So if you've got money in the bank and you can afford to put uh put some money down and and and buy that property, then it's just about using that money for a short period of time, getting it back so you can use it again, right?
• 20:21
  SPEAKER_00: And then in that instance, you know, we might buy it cash and then go straight to a mortgage at the market value and get what we can back out of it, right?
• 20:29
  SPEAKER_00: Because that's our same-day remortgage, right?
• 20:31
  SPEAKER_00: We bought it cash and we're going to mortgage it immediately after.
• 20:34
  SPEAKER_00: Actually, we'd start the mortgage process at the same time you're doing the purchase, so that as soon as your purchase completes, the mortgage completes, you get your money back, right?
• 20:41
  SPEAKER_00: Because you've got that cash there to enable you to do it.
• 20:44
  SPEAKER_00: Now, if you didn't have that all that cash, then we could potentially use a bridge loan to replace the cash.
• 20:51
  SPEAKER_00: And you might need some sort of deposit with 25% below market value.
• 20:55
  SPEAKER_00: You know, you you probably need maybe a 10% deposit or something like that rather than the standard 25, something right like that, and limit how much you put in.
• 21:06
  SPEAKER_00: If pulling the money out is not the main thing, then there is the option to kind of go to a mortgage, or maybe there isn't enough in there.
• 21:15
  SPEAKER_00: So let's say it's 25% below market value, and actually, if you bought it on a bridge and then refinanced it, the costs of the bridge would eat up that 25%, you know, uh smaller property value.
• 21:28
  SPEAKER_00: 25% could be less money in tangible terms.
• 21:31
  SPEAKER_00: So in that instance, we might just go, well, we just want to acquire the property and get it into a mortgage as quickly as we can and limit our costs.
• 21:39
  SPEAKER_00: We're not really bothered about pulling out extra equity and we can afford a 10% deposit, say, then actually we can go straight to a mortgage with a 10% deposit if it's below market value by 25%.
• 21:52
  SPEAKER_01: And the 25% or 15% if you put 10% in yourself, is that the equity that you have in the property?
• 21:58
  SPEAKER_01: They're happy to have that as a deposit.
• 21:59
  SPEAKER_01: So just speak towards it.
• 22:00
  SPEAKER_00: Effectively, yeah, that's what they're saying is that they're taking the equity as the deposit.
• 22:05
  SPEAKER_00: So when you when you look at this this kind of example then so if you were buying it for 100,000 but it was 25% below market value, then the market value would be 125.
• 22:19
  SPEAKER_00: That's what it's that's what we're saying the market value is.
• 22:21
  SPEAKER_00: Then what we could do there is we would get a mortgage of 90,000 and put a 10 grand deposit in yeah and go straight to mortgage.
• 22:31
  SPEAKER_00: Cut out the bridge cut out all the faffing about doing a purchase and doing this and doing that.
• 22:36
  SPEAKER_00: Don't need to do do all that two stages just straight to mortgage with a purchase and it offers simplicity and a lower cost entry.
• 22:44
  SPEAKER_00: But there is some downside to it because you're giving something up as well the downside is the the interest rate's going to be higher right for that type of solution the lender's going to charge around six and a half percent right because they're the only mortgage lender where you can go straight to mortgage with a 10% deposit that I'm aware of anyway.
• 23:03
  SPEAKER_00: We can do it with a bridge we can do it by buying it cash and then coming and doing something else but all this has multiple layers and costs and more complexity and time right ultimately to to to navigate whereas if the simplicity is needed it's straight to mortgage but it doesn't it does make your equity position really good.
• 23:22
  SPEAKER_00: Because effectively you've got a 90,000 pound mortgage when you look at your portfolio spreadsheet you know you've got this property you bought it for a hundred grand but you've got a 90 grand mortgage you've got 10 grand that's your cash in there and then effectively you've got 35 grand equity there.
• 23:39
  SPEAKER_00: You know your your your equity to debt ratio on your portfolio looks really healthy.
• 23:44
  SPEAKER_00: You know you're not leveraged up to the maximum and it's a it's a it's a good it's a good asset to to have on there.
• 23:50
  SPEAKER_00: So it depends on the client really but there's different ways that things can be done.
• 23:54
  SPEAKER_01: I love that as well I love the fact that you brought up the equity because so many people just want to you know basically spend all the equity uh go again and go again and go again and then at some point and it's normally only a couple of properties in the financial guys say whoa whoa whoa you're mortgaged up to the hilt you know you've got too much too much debt so to speak so it's good to have as you were saying there it's good to have actually a bit of equity if you have to leave a bit of skin in the game as they say a bit of money in there it can help you do more deals in the long run can it yeah well I think the the overriding principle is you know don't don't leverage things further than you need to so you know figure out we can figure we can help you figure out you know where you need to leverage it to to make the deal work and to get the cash for the next project because that's what it's about it's the next it's what what's next.
• 24:39
  SPEAKER_00: That's why we're pulling money out but not overdo it.
• 24:42
  SPEAKER_00: You know if it's just going to sit in the bank and do nothing and you don't need it then let's not because we have to factor in things like you know property prices might change in the future there might be periods when they come down you know there might be changes in rental or interest rates or other things as well that can have an impact.
• 25:00
  SPEAKER_00: It's good to have a little bit of of ability to be flexible inside that portfolio.
• 25:06
  SPEAKER_01: Brilliant brilliant well thank you ever so much for your time as always Rob absolutely amazing I could discuss this with you all day long.
• 25:13
  SPEAKER_01: But you know Rob and his team are there to help and support you.
• 25:16
  SPEAKER_01: I've always said this you know get get take a picture of the QR codes if you're watching this if you're listening to this afterwards or whatever we'll put the links in the description below reach out to Rob and his team have a chat with them because there's so many different ways so many different ways that you can do property deals that you might not be aware of and I do know that you know some of the questions I've asked there's because people have have spoken to me about it and they get so hung up on different things.
• 25:39
  SPEAKER_01: Let's speak to the financial experts Rob and his team are those guys and girls.
• 25:43
  SPEAKER_01: Any final thoughts before we wrap this one up mate no I think we've covered a lot of ground there Mark yeah no brilliant brilliant well as as I say thank you ever so much for your time my friend and I look forward to seeing you next month.
• 25:55
  SPEAKER_01: See you next month.
• 25:56
  SPEAKER_01: Take care buddy cheers bye bye bye