While everyone stopped allowing bridge and remortgaging over 18 months ago Mortgage Express carried on doing it until around April 2008.  Now I took out some Mortgage Express mortgages on a Bridge and Remortgaging strategy but there was a big difference between my purchases and 90% of the other investors doing bridge and remortgaging:

 

My purchases were at over 300% rental coverage!

 

Even though Mortgage Express required only 110% I clearly exceeded their requirement.  However I knew of LOADS of investors who were buying properties at £200,000+ at 30%+ BMV, getting massive cashbacks and renting to basically bankrupt tenants who used to own the very home they bought.

 

These properties were yielding at around 5% which just about covered the mortgage but as soon as the tenant is late with their rent, a repair was needed or a slight increase in interest rates these deals went very bad.

 

Now Mortgage Express has properties on their books with £200,000 debts outstanding on them and are probably worth £175,000 in reality.  The investors who are defaulting on these loans have rubbish tenants in them and are not suitable properties to be rented out easily (due to the properties being typically owner occupier properties).

 

Now the government is lumbered in shifting these mortgages but NO-ONE will take these on.

 

I will miss mortgage express.  When I started out in buy to let they were a key lender to me and they were very quick.  I even wrote a letter to the MD to Mortgage Express complimenting on what a slick process he operated.

 

You will be hearing that buy to let is the cause of the demise of Mortgage Express and a further reason why buy to let is dead but only the landlords within the industry know the real reason why they went down.  They should have either:

 

1. stopped the bridge and remortgage strategy
2. increased the 110% to a more sensible number, like 150%
3. used their own surveyors instead of letting fraudsters submit their over inflated surveys

 

Anyway, there has been a lot to learn from the last 12 months and I am just glad I maxed out my borrowing with Mortgage Express to the tune of £5m!

 

Ajay

  
Posted on: 29th Sep 2008

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