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How To Avoid Quick Buy Property and Mortgage Scams

How To Avoid Quick Buy Property and Mortgage Scams
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Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

Almas Uddin09 Feb 2021

The property market is under immense pressure, with Stamp Duty holiday deadlines under discussion, affordability rising and prices escalating.

Here at Revolution Brokers, we've seen an enormous level of demand across the board.

From first-time buyers completing Help to Buy purchases (the scheme closed for most new applicants in December) to investors looking for attractive rentals, the rush is on while the Stamp Duty holiday saves buyers up to £15,000 per property.

We've helped thousands of clients looking for mortgage agreements in record-breaking time.

From this hive of activity comes a sinister side-effect, with lenders and agents taking advantage of sellers and buyers desperate to complete their transactions before 31st March.

This article will run through the red flags to look out for - and critical signs that all is not as it should be.

Quick Sell Properties - The Scams to Watch Out For

First, we'll look at the quick house sale companies.

In the most part, these are legitimate businesses snapping up properties at compelling prices - and, at the same time, providing a lifeline for sellers who are the weak point in a chain and risk losing out on their dream home.

More and more people are looking at ways to sell a house without incurring steep estate agents fees.

Quick sale businesses usually deal with each seller directly, reducing the costs payable and often offering to cover legal costs.

Should you be looking to shift a property quickly, or in a tough market, you're likely to be offered a price underneath standard market value.

That is normal, and you'd always expect to negotiate on your listing price or be offered a slightly lower value if you need to achieve a fast turnaround.

Investors financing quick sale businesses are of course there to make a profit, so it's wise to make an informed choice about how long you might need to be able to secure a sale through more traditional routes, and then decide whether it's worth taking a hit on the price.

However, lately, there have been numerous scams circulating, looking to take advantage of sellers who have lined up a purchase, but cannot seem to find a buyer, with the Stamp Duty deadline (as it stands!) looming:

  • Offers for 100% of market value are highly unlikely to be authentic.
  • Sellers should check quick buyers to verify that they are registered with The Property Ombudsman and the National Association of Property Buyers.
  • Unusually positive review ratings are often fraudulent - it's wise to check on a few different sites, such as comparing Trustpilot to allAgents.

Most of these scams make inordinately attractive offers, sucker a seller in to complete all the paperwork, and then drop the price dramatically at the last minute when you have little chance to find another option.

It's well worth speaking with an experienced broker or agent to verify any such company's authenticity before signing any paperwork or accepting an offer.

Unethical Lending for Quick Property Transactions

Next up, let's consider the other side of the coin - investors or individuals who are keen to get onto the property ladder, upgrade to a new home, or invest in a new rental while the taxation regime offers lower costs than usual.

When you need to get your mortgage finances in place, it might be tempting to jump at the first offer you get.

We'd always recommend consulting a whole-of-market broker before taking up a lending offer, as the deal you have might not be competitive at all!

There are tens of thousands of mortgage products on the market, and it's very easy to be convinced that a deal is a good one, if you don't have the resources to compare other products or rates.

  • Price comparison sites are not a great way to get the best mortgage offer. The products shown are often paid for advertisements, not an independent review of the market's optimal mortgages.
  • Applying online can be quicker and easier, but beware of completing your details if you aren't sure which bank you're applying to or what checks are being carried out. Hard credit checks can quickly rack up on your credit report, and make it even harder to find competitive lending.
  • Fee-free mortgages are often marketed as a lower-cost mortgage, with short turnaround times for arrangements. However, you need to know the overall cost, as there is little doubt that costs such as valuations and legal fees will be paid for by you - but be rolled up in the mortgage charges rather than an upfront expense.
  • Mortgage offers that sound too good to be true probably are. For example, they might have onerous exit charges and tie you into an inflated interest rate for several years.

Revolution Brokers has years of experience negotiating mortgage lending through reputable lenders, whether a high street bank or a niche specialist lender in a specific sector.

In this highly pressurised market, we have dealt with many cases where clients are so keen to secure their purchase and get in before the Stamp Duty deadline; they consider mortgage offers we would never recommend.

Alternative Fast Home Loan Options

One option that is well worth considering is bridging finance. If you can't get a mortgage before 31st March 2021, remember that a mortgage is only one type of home loan, and a broker can recommend other, suitable alternatives that will help you secure your investment.

While a bridging loan is only short-term and carries higher interest rates than a traditional mortgage, it's also much more flexible and takes just a few days to organise in most cases.

  • Bridging finance can be arranged in a few days, usually up to two weeks even in more complex applications - giving you plenty of time before the Stamp Duty holiday is due to end!
  • Criteria are more flexible so that you can borrow against a renovation project, uninhabitable property or non-standard home in far more instances.
  • Refinancing through a buy to let or residential mortgage can then be arranged at your convenience, with plenty of time to work through the products on the market and identify the most affordable options.

If you're concerned about completing a sale or purchase transaction before 31st March, be aware that there are many lenders and buyers on the market who are not properly accredited.

The best way to secure an authentic, affordable and reliable loan is to work with an FCA registered independent broker, with a full view of the marketplace.

Give the Revolution team a call on 0330 304 3040 or get in touch via message for more assistance with fast property transactions.

Contact us now to discuss your personal options, Revolution Finance Brokers specialise in commercial and residential finance in Essex, Kent, London and Hertfordshire.

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FCA disclaimer

The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature.

We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.