Property Lending: Understanding the Market
October’s PIM focused on lending in the current market and the economic outlook.
Record numbers came to hear our 2 excellent speakers from Lloyds Bank, who gave us a fascinating inside view of property investment from the lenders’ perspective, including how they approach lending – and how best you should approach them to be successful in obtaining loan funding for your property investment projects.
Daniel Taylor is a commercial manager with Lloyds Bank, based here at Lloyds’ headquarters, in Bristol and responsible for Property businesses in Bristol & Somerset.
Interestingly, despite all the negative press about lending, Lloyds are increasing their lending year on year and a very encouraging 80% of loans are approved.
Interesting and useful points highlighted included the following:
- Bank lenders such as Lloyds do not limit their lending to eg max 5 properties, unlike some lenders
- Lloyds are currently working on long term interest rate assumptions of 4% base rate
- They prefer repayment loans
- Thier max LTV (loan to value) is 70% (65% for commercial property)
- LTV obviously affects interest rates
- Deposits do not have to be in cash – the value of your existing portfolio can be taken into account.
So, these are some of the key things you will need, for a successful application:
- Up to date financial accounts
- Accurate management information
- 6 months’ business bank accounts
- Personal income and expenditure
- Personal assets and liabilities
- Property schedule – name, value, lons etc
- Credit policy
- How best to approach a deal with a lender
to contact Daniel direct, email him : daniel.taylor2@lloydsbank.com
Rhys Herbert is an economist based in Lloyds’ London office.
He gave a very interesting talk about the economy and the outlook for interest rates – and generated a huge number of questions.
Generally he expects interest rates to increase slowly over the next 12 months, with rates reaching 4% over the long term. The current 0.5% is really an emergency rate, reflecting the dire state of the world economy over the last 5 years and during the recession.
Rhys highlighted that the outlook does depend on world markets and increases will depend how these perform over the next few months – even some of the much stronger economies have seen growth slow eg China. In Europe, our largest export market, Germany has been strong but seems to be moving sideways over the last couple of months, while Italy and Spain are still in a very poor state.
The US, the largest economy in the world, has seen a similar pattern to the UK, with a weak recovery from the recession, is now looking stronger, but is not fully recovered and faces a similar dilemma over whether and when to raise interest rates.
Samantha Evans – Real Life Story – Rent to Rent
Samantha Evans also shared her personal story. Over the past 18 months she has built her rent to rent portfolio, starting from scratch as a complete beginner and while working full time as a nurse, with support from Property Options.
She now has 5 “rent to rent” properties and very helpfully shared exactly how she has gone about finding and acquiring them. They are typically 4-5 beds, let on an HMO basis and together they generate a profit over over £2k per month – although there are some set up costs for furnishing the property, plus the legal costs for the tenancies to take into account.
Sam’s is a very much real life, ongoing, story – with ups and downs, including odd hassles with tenants and with occasional requirements from her landlords. One of the real keys to her success has been to keep talking to everyone involved, building strong relationships and finding solutions to any minor problems.
Of course, it is hard work too, especially in a full time, long hours, job at first, but her success has enabled Sam to cut her shifts down and build solid foundations for her future.
This was a really interesting “warts and all” talk, which was so helpful to many of those starting out – and very encouraging too – Congratulations Sam, you showed us all just what can be done, with enthusiasm and commitment.
Make sure you join us for our next PIM on 27 November 2014 at Holiday Inn, Bristol City Centre, BS1 3LE 6-9 pm –when Gavin Barry is our headline speaker. He’ll be talking about the mindset you need to become a successful property investor – an essential topic.
For more info and to reserve your place CLICK BELOW!
We look forward to seeing you there.
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