Questioning our broker-commercial mortgage 5yrs 11 months post bankruptcy

LisaJW

We have a mortgage broker as we have a bankruptcy (from our sole trader business) from feb 2009.
I'm just getting a few alarm bells.
1) the 2nd tier lender he's found for us is demanding a 40% deposit where he thought he'd be able to find us a deal with a 25-35% deposit
2) he's charging 4%
3) plus an application fee of £350
4) he told us a valuation would be around £500 but is actually 920
5) sound silly but he smelled of stale booze at one of our meetings
6) the interest rate is 9.6% variable- although he thought it was fixed to begin with, then changed his mind.

Are we really stuck with all of this because of our nearly gone bankruptcy, or is he taking advantage of our situation?

Should add our bankrupt business was a gastro pub, as is this purchase., which is 'apparently' why there aren't many deals around.

Thrugelmir

LisaJW wrote: »

Are we really stuck with all of this because of our nearly gone bankruptcy, or is he taking advantage of our situation?

If you don't proceed then your broker earns nothing. Remember that brokers don't lend money, lenders do. They specify and set the terms on which they'll do business with you.

ACG

LisaJW wrote: »

2) he's charging 4%
3) plus an application fee of £350

Run a mile!

Unless its a very small mortgage 4% is daylight robbery.

Speak to another broker, see if they can better it. 9% with that sort of deposit seems on the high side. Your options will be limited and you will end up paying more but a 4% broker fee + £350 is far far too much.

Dave_Ham

It is very difficult to determine products with limited information here.

Much will depend upon the absolute and the details of what you have been doing post bankruptcy

Be sure that the 4% is a broker fee and not a lender fee. Assuming the lender here begins with L, then they have a high acceptance or similar fee.

You are selecting from a limited pool of brokers/lenders here with a poor track record.

I need to mention that the failed business was probably with cheaper finance so please, please be sure this venture is feasible as clearly you have earned/saved well post bankruptcy

Best of luck in any case

Senior_Paper_Monitor

My guess of source would be the same as Dave's


Most lenders view financing pubs (gastro or otherwise) as attractive as a dose of herpes.


With a bankruptcy in the background (even some years ago) this becomes even more difficult - and, again as Dave says, the detail of the credit report since will be the deciding factor.


You certainly need to ensure that you understand what is going to the lender and what is going to the broker before making any judgement.


Any initial suggestion of 75% LTV was extremely optimistic in the circumstances - other than the possibly 'over the top' broker fee (and I suspect this is very much a joint lender/broker fee - with considerably more than 50% of that going to the lender) the product is pretty much inline with what I would expect (based on the limited information available).

LisaJW

Thank you everyone.
I've been in touch with another broker & he's asked for a LOT more info than our current broker.
Just to confirm the (original) broker is getting the 4%.
The £350 was the mortgage application fee.
Still no kfi or formal offer received even though the valuation has happened.
The last bankruptcy was due to Punch Taverns upping the rent to £72k pa plus vat in 2009.
Since then we have run very profitable award winning pubs as employees & leant a lot!

LisaJW

The lender doesn't begin with an L.

Dave_Ham

As with anything, devil is in the detail in our world and always like a broker that asks lots of questions upfront.

Which lender did the first broker go to on our behalf, bet it is part of the same group?

I expect rate to be similar although if broker is 4% then this is heavy even for a commercial deal, so expect you can get this cheaper.

Best of luck - good old punch

ACG

I think all pub companies are the same. I lived in 2 pubs and they were both greedy. Once you find a way to avoid brewlines your laughing.

Dr._Shoe

Indeed. Free housing is definitely the way to go if you can. This does depend on owning the house outright though, any tie with a brewery or chain whatsoever will limit your options even if rent is not the problem. Make sure the property is freehold or, if not, make sure the landlord is not in the hospitality business. As with all agreements check the terms of any lease really carefully and try to get a clause offering you first refusal on the freehold.

LisaJW

It's a freehold. Wouldn't ever touch a leasehold again! Once bitten & all that ;-)