The Property Unleashed Podcast

Stop Waiting Six Months: How To Finance, Refinance, And Scale Without The Usual Roadblocks

• Mark Fitzgerald • Episode 354

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We bust the biggest mortgage myths holding investors back and show how to structure deals that lenders actually fund. From day-one remortgages to HMOs and auctions, we explain the rules, the exceptions, and the smarter exits that keep risk in check.

• six-month ownership myth and day-one remortgage options
• prohibited uses on standard mortgages and compliant lender routes
• risks of auctions with mortgages and safer funding stacks
• second charges with bridges and SSAS first-charge realities
• HMOs and development finance without prior experience
• deposits for development versus investment and stretch LTVs
• designing for commercial valuation with ensuites and demand comps
• exit-first planning, comparables, rental coverage and lender fit

You can email us at inquiries at simplefastmortgage.com
You can ring us, the team will be delighted to take your call, and you can jump on the website
There’s a quick form on there, it takes about 30 seconds to fill in, and we’ll be in touch with you within 24 hours
We are closing the office on Friday this week, and we’ll be closed for two weeks for the Christmas break
If you want to have a quick chat before then, get in quick


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Year-End Myth Busting Setup

SPEAKER_01

So into our closing comment. So we've talked over quite a lot of subjects this year so far. And what I wanted to do with December really is just have a little bit of a roundup and dispel some kind of mortgage myths, things that people say to me that are here in meetings, that are here in conversations, things that people see as barriers to what they're doing, or sometimes things where they don't see the barriers to what they're doing. I just wanted to run through some of these examples today and answer some questions that hopefully provide a little bit of clarity to what you can and can't do, what's possible and not possible. I need to wait six months of property ownership before applying for a mortgage. I hear this all the time. You don't. Quite simply, not at all. If you've bought that property for cash or you've acquired it on a bridge or whatever it is, you don't have to wait six months before you can mortgage it. There are options to do it within six months, and there are options to do it outside of six months. And depends on the situation, you know, what the difference is between those two. Usually it's not worth waiting for the six months. I can do rent-to-rent, commercial lease, supported living or social housing with any mortgage. You can't. Well, you can, but you're not supposed to. I suppose is the technically correct answer. If you do, then the chances are that it's against the mortgage rules. That means that they can call their money back in if they find out. They can just say pay the mortgage back. We're not happy. Also, it probably invalidates your insurance. So if there's an issue with the property, it burns down, whatever, then you might not be insured. The reality is that 95% of lenders do not allow rent-to-rent, commercial lease, supported living, social housing. These are very, very niche areas. There are some specialist lenders who operate in that area. We know who they all are. And if you want to operate in that sector, give us a shout. We can talk you through what that looks like. I need to I need income to apply for an investment mortgage. So if you want to buy to let or a HMO and you don't have any income, people say, Oh, well, I can't do it because I don't have any income. False. You can do it if you don't have any income. But obviously, we need to look at the situation as a whole and understand what's going on. It might mean that the interest rate's slightly higher, it might not, but it is possible. I can't mortgage at market value if I haven't done work to the property. So that's false as well. So you could buy a property today and you could remortgage it the same day or tomorrow at the current market value. Quick example: I buy a property at 100,000, I've bought it below market value, it's actually worth 150. I'll buy it for cash today, and same day today, I've got my mortgage lined up, or tomorrow I can complete on that mortgage on the actual value of 150 and borrow all my money back plus a bit extra. That is possible, and I've done no work to it. Obviously, there are consequences to that. There are there are ways and that things can be done, but that may mean again a higher fee, a higher interest rate, but it is absolutely possible. And I know this 100% because I've done it myself. I can buy an auction using a mortgage. So some auctions, you know, you get a couple of months to complete, you might get 56 days. And it's quite tempting to think, well, I can use a mortgage to do that. Whilst it is technically possible to do it, the mortgage product is not designed to meet that need. So what you really have to say is, am I comfortable that if the mortgage doesn't complete within those 56 days, that first of all I might lose my deposit and also the ability to buy the property, or I've already negotiated with the auction house or the seller and they're happy to let me have a bit of leeway if need be. Mortgages generally are not designed for auctions because they take ages. Is that's the reality? Cash and bridge is what is needed at an auction. But it is technically possible to do it, but you've just got to be aware of the risks. I can give an investor a second charge on my property and also get a bridge loan. 90% of bridge loan providers don't allow this. So a lot of property courses will say to you, Well, it's really easy to buy a property, all you've got to do, you go get a bridge from here, you go get some private finance from here, from somebody you know has got plenty of money in the bank. That person who's got the money in the bank, they're happy to lend you it, but you've got no experience, you've not done this before, they feel a bit unsure about the money, they want to get a charge on the property to give them security. Well, most bridge lenders won't let that happen. There are some who will. We've even done bridges, but also mortgages with second charges still being on them when they've gone through to the mortgage centre. So it is possible, but it's not a blanket approach. Don't believe everything that you hear in some of the uh some of the training courses. I can use my SaaS pension to part fund my property purchase. Again, this is kind of widely publicized. You know, you can use a SaaS pension, put money in there, use that to fund some of the property purchase, and then use a bridging loan to top it up or a mortgage to top it up. Generally speaking, this doesn't apply all the time, but generally speaking, SaaS pension rules are quite strict, and what they'll insist on is that they have a charge on the property, and usually they want the first charge. Now, if they're having the first charge, there isn't any lenders who are going to take a second charge who are going to do that and fund some of the property purchase with that second charge, generally speaking. So usually if you're using a SaaS, you want to use it for all of it, or find another way in which you can use that SaaS to kind of help you out. I can't do development finance because I don't have any other property or landlord experience. Again, experience is not a barrier to doing anything. We've got solutions for pretty much everything. I can't get a HMO mortgage because I don't have experience or landlord experience. Again, you can go out and you can do a HMO. It can be your first HMO, you can get a HMO mortgage, you can get bridging and development. Um, you don't need to have all that experience there to do it. And it doesn't really have an impact on the rates that you're paying either. You're gonna have the same kind of rates that everybody else is gonna have for a commercial valuation style mortgage. Don't necessarily worry that that's gonna stop you from doing things. What I might not go out and do is go out and do a 42-bed HMO for the first project. But anything up to six, absolutely fine. If it's a bit bigger than that, let's have the conversation and let's see what we can do. It still doesn't mean no. I need 25% deposit for development finance. So everybody knows that mortgages generally you need a 25% deposit, right? If you're having an investment mortgage, but people often think it's the same for development finance. Usually it's not. With development finance, you need a bit of a bigger deposit. It's usually around 35% because the lender's not only funding the purchase, but they're gonna fund money towards the works as well. Probably all of the works, if the numbers are right, and it's a good project. So what that means is they'll limit how much they lend up front. And so that means that your deposit's gonna be a bit bigger. So you need to budget for a bit of a bigger deposit if you're gonna do development finance. And what I mean by that is buying a property, turning it into a HMO, buying anything and turning it into something else using a bridge and development finance to fund it. I need to put a 25% deposit down on any property that I buy. You don't. Yeah, there are ways in which we can look at things where you might need no deposit. You're gonna need something else to step in there. It's got to be really under market value. You've got to have other assets that we can maybe look at and and and secure something extra, tag something extra on top of those to help give the lender some additional security. But there are ways and means that you don't always have to have a 25% deposit. There are lenders that will allow you to borrow up to 85% just on a buy-to-lep. So you could put as little as a 15% deposit down. You're gonna have a higher interest rate, so it's got to be a strong deal. There's got to be good rental income coming in, but it's still possible. You could buy a property that's under market value, and we could get as little as 10% deposit down onto a mortgage with that. You know, there are lots of creative solutions that are out there, and of course, we're in December, we're almost upon Christmas. So I guess the last myth we should dispel is Santa real? Absolutely, Santa is real. And that's pretty much it for me this year. Here's our contact details. If you want to reach out to us, you can find us using these details. We're on all the usual platforms, mainly Facebook, Instagram, and LinkedIn are the ones where we are active. You can email us at inquiries at simplefastmortgage.com. You can ring us, the team will be delighted to take your call, and you can jump on the website. There's a quick form on there, it takes about 30 seconds to fill in. Tell us what you want to do, what you're looking at, and we'll be in touch with you within 24 hours. We are closing the office on Friday this week, and we'll be closed for two weeks for the Christmas break. But if you want to if you want to have a quick chat before then, get in quick. And that's pretty much it for me.

SPEAKER_00

How dare you close for Christmas, Rob?

SPEAKER_01

Absolutely. What's that all about? Absolutely. We all need to we all need to have some downtime and and and and reform for the for the new year. We're no different.

SPEAKER_00

No, definitely not. Definitely not. No, that was great. The myths, absolutely brilliant, because there's so many, you know, crazy things that get dispelled out there, or people who actually aren't even, you know, mortgage brokers and and are savvy on all of that, that are telling people they can do this, they can do that.

SPEAKER_01

That was Dave, is it Dave down the pub has told me this, and so and so everybody's a mortgage broker. That's that's the problem, isn't it? It's like when you know everybody's a doctor and everybody's a mortgage broker, you they'll give you the advice. But yeah, could be careful you take advice from, aren't you?

HMO Uplift Plan In Reading

SPEAKER_00

Well, that's why it's good to have, you know, uh like you, a power team member, somebody that you can uh tap into, you can ask the questions to before you go and do something, so you can see the best way to set yourself up for success in doing so. Quick question for you, Rob, my friend. I've got a friend of mine actually who's got a six-bed HMO that he's looking at purchasing. He it's two-bathroom, six-bed, two-bathroom at the moment. It's pretty it's a bit like a student letter student property HMO at the moment, and he's he's wanting to give it an uplift because it's it's getting a bit tired. He wants to add a few more ensuites, so it'll have at least probably four ensuites in the properties and things. And then obviously, he'd like to look to try and get it onto a commercial mortgage. Is there any sort of uh top tips you'd give somebody that's looking to do that sort of thing?

Funding Routes And Pragmatic Lenders

The Magic Numbers And Farewell

SPEAKER_01

Is this one of those I've got a friend questions? Yeah. So it's not right, it's not your HMO then, Mark. Uh no. No. So if so the key thing is is you start with the end in mind, right? So what what do you want to produce as an end product and and and and and how do you make those numbers stack up and what do you need to achieve? So if he's gonna add the ensuites, then effectively this is highly likely he's gonna get that commercial valuation because without the ensuites, 100% he's not getting a commercial valuation. It's gonna be a bricks and mortar. Six bedrooms, two bathrooms, bricks and mortar value, normal house with six bedrooms. However, if he adds the ensuites, and even if he gets five ensuites and an off-suite or you know, five bathrooms or something like that, it'll get him pretty close, can then access that commercial valuation, which is hopefully going to pump up the value quite a bit. Do you know whereabouts in the country it is? It's Reading. Okay, so plenty of HMOs in Reading. So that's fine. And you want to make sure it's in an area where there's precedent and demand. There's other HMOs that a valuer can measure it against and say, you know, I can give this this yield-based value because there's already proof of all these other ones that are doing a similar thing. So on that basis, you can access that kind of commercial valuation. I guess the question is then how how is he going to buy it, first of all, to do the work to get to the point where he's going to mortgage it and access that new higher number. So it's either going to be cash or he's going to use bridging and development finance, you know, and do it on a bridge, and then we go off onto a mortgage afterwards, or he'll do something a little bit more inventive, you know, maybe like a lease option or exchange with delayed completion or some something like that. We can cater for all of those circumstances. Even if we did an exchange with delayed completion, so he doesn't technically own the property yet, but did all the work in it, and then we evidence that work, we've got lenders who will still let us use the market value at the end to mortgage on. They're not going to go, oh no, you're buying it for this lower amount. We're just going to lend on that. They'll look at that higher amount because we've got we've got lenders who are quite pragmatic and know how we operate and cater for our clients. So, you know, there's there's ways and means of doing things. But yeah, top tip is is look at your exit, what's your what's your market, what do you expect the value to be, and then and then design the product to to kind of meet that.

SPEAKER_00

Brilliant, brilliant. No, that'd be good. That's great advice as well. And I think at the moment, the the person he's buying it from of is obviously wanting as high a price as they can get for it. So it's trying to keep it as cost-effective that the numbers still work. And I do actually think that the delay completion is almost like giving the owner of the property what they want, if they can give us the terms that we want, I think will be a real eye-opener to him. So I'll send him in your general direction as well, because he's uh he is going to buy stuff, he is he is all about getting out there and 2026 is is bit of building up his own portfolio. So that's great advice. Thank you for that.

SPEAKER_01

Yeah, I think with those sorts, those sorts of deals. I mean, ideally, what you want to do is buy at bricks and mortar or a little bit below and refinance at commercial. Yeah, that's generally what you kind of want. Although Reading, you know, is probably quite high price for bricks and mortar as well, with it being so far down south. So so yeah, it's it's it's all about those two numbers, isn't it? The purchase price, the cost of works, and then what's the end value and the rent going to be? Those are your magic numbers, I think.

SPEAKER_00

Amazing. Amazing. Well, thank you ever so much. It's always great to have you on, my friend. Always appreciate your time and your knowledge and wisdom. And I hope that you and your family have an absolutely amazing Christmas. It's great to be here. Thank you, Mark. You too. All right, you take care, mate, and I'll speak to you soon. See you later. Cheers bye bye.