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Recent press coverage has talked a lot about the potential cooling of the UK property market, especially in the context of rising inflation and interest rates. This can translate into apprehension about if now is a good time to buy or sell property.
Market analysis is always entirely focused on predictions and factors influencing domestic and global markets. However, most of these opinions overlook the personal and situational reasons that affect why many people buy and sell real estate at any given moment. You may want to buy rental property to generate income, upsize or downsize, get on the property ladder, buy an investment property, etc. These personal reasons are often hugely motivating factors in new property purchases and they can’t be timed to the market. A growing family cannot wait indefinitely to upsize, and there is rarely a "perfect" moment to get on the property ladder, for example.
We all wish there were ways to predict the future or outmanoeuvre risk entirely. Because it’s not possible, we say this: especially when there is economic uncertainty, the best path forward is to consider all the risks, secure the very best rates available, ensure your mortgage is tailored to your personal situation, and you don't overstretch yourself in terms of what you borrow. Provided your financial background, income, and assets support your mortgage and the property purchase, there is generally no reason not to push ahead. If there is anything – even minor – that you have doubts about or are unsure of, talk it through with advisers and experts and get clarity upfront.
One particular point of attention in the current market is ensuring you don't get caught up in bidding competition that drives up the cost of your property purchase. When several buyers are vying for a single property in an attempt to outbid each other, be wary of making offers significantly above the asking price without careful forethought. Lenders will not offer a mortgage against more than the property value, so you will need to make up the difference in cash. Sometimes, extenuating circumstances make outbidding other buyers a beneficial thing to do, but if there is no inherent value in doing so, consider your path forward carefully.
Buying a property is synonymous with "mortgage", but mortgages aren't the only option available to finance a property sale. In the current market, sellers are sometimes inundated with competing offers and prospective buyers. Provided all those offers are in the same price range, the seller will usually choose the offer based on what is most advantageous to them, which is generally a fast completion or a buyer with no chain.
Cash buyers reign supreme in competitive markets, but this doesn't mean you need to have saved up the capital to buy a property outright – there are other options. Bridging finance can be one way to complete property deals quickly. Your current home or an existing property in your portfolio can be used as security, and lenders will give you a lump sum to make the property purchase. Bridging loans are short term, usually lasting from a few months and up to three years. You can repay the loan by refinancing (giving you time to negotiate a mortgage with other lenders once you have taken ownership of your new property). Alternatively, you can also sell other assets, another property or use a liquidity event to repay the loan.
Securities-backed lending is another option. Here, you can use your marketable securities (including pre-IPO and unlisted stock) as collateral for a loan. Here, you will pledge your securities to a lender and be offered a credit line in exchange. Many people use it to buy property quickly.
Both bridging finance and securities-backed lending can be arranged very quickly – in just a couple of weeks, effectively giving you the liquidity to complete property purchases much faster than with a conventional mortgage. Both options will also allow you to break chains, which is hugely attractive in today's market.
Enness regularly works with clients who have diverse and global assets. Depending on what you would like to put forward as security for a loan, we can source finance from lenders who offer loans against the assets that are most beneficial for you to use as collateral. As well as loans secured against securities and property, we can also broker finance against luxury assets and cryptocurrencies.
Sometimes it will be helpful to provide more than just the bare minimum information about your financial background to give context and clarity to lenders and in turn unlock better rates. Supporting this with documentation will be critical, and compiling documents as early as possible helps keep things moving. Enness will help you understand what lenders want to see and how to present it to ensure your offer is accepted.
If you are what lenders consider to be a "complex" borrower, documentation will also be critical to securing your mortgage offer. If you fall into this category, you may need to supply more information or documentation as part of your application. Foreign investors buying in the UK, business owners or entrepreneurs, British expats or resident but non-UK nationals buying UK property tend to find lenders want more information from them as part of their application. Enness regularly works with complex borrowers and know exactly what lenders will need to see and how it should be presented. We will be able to work with you from the get-go to help you collect this information preemptively (rather than reactively) to speed up the process and support your mortgage application and offer.