Lender bucking the trend

mortgages in spainIn an environment of very difficult lending it would appear Ubiquitous Mortgages are able to buck the trend and completely out-price all of the world’s major banks.

While other lenders have withdrawn from the European market, with many French Banks closing the doors to international clients, Spanish Banks doing the same and many international lenders like Lloyds and UCB either withdrawing totally or partially, Ubiquitous Mortgages, owned by Mark Foreman, are out there with rates that appear unbeatable, rates that are the same wherever you buy immaterial of underlying interest rates in that country, and rates that cannot be replicated by the major financial institutions.

Why Ubiquitous, who say they are the lender, would take a completely different view of the markets to other lenders and be able to finance the capital required to lend at rates well below the current cost of funds is not clear.

According to their website, which has been updated recently, they have the enormous sum of £250k paid up share capital. This massive amount of capital obviously allows them to borrow on the open market at rates well below those of the largest Banks in world like Barclays whose Chief Exec earns more than that in a quarter.

Unless they have a banking license in all the countries they lend in it must be private lending and therefore not covered by any banking regulation within the countries they operate in. Either way they are apparently able to sit outside of the current liquidity requirements for all lenders, as having £250k liquid cash would hardly allow you to lend anything if you were to fall within current balance sheet requirements stipulated by most central banks and regulators. Of course the balance sheet may have much more cash to cover risk but then if so why not mention it.

To insinuate on their web page a mortgage broker is unstable because they usually only have £100 paid up share capital will not give comfort to any client who knows only too well there is a huge difference between being a service provider which a broker is and an apparent worldwide lender.

To even raise paid up share capital as an argument to use Ubiquotuios seems ludicrous because of more concern to a client could be the fact they have admitted to such a small amount of paid up share capital.

The conclusion clients may come to is that they may not be the direct lender at all and are at best in fact an agent for another financial institution, who either has private investors who only want to earn just over 3% a year, or have a tranche of money from a lender who can buy funds very cheaply or have such a high level of liquid cash they can lend at rates that for other banks would be unprofitable. If this is the case why say you are the lender as this is misleading?

Either way a sensible client would certainly want to see the type of legal document they would be asked to sign. Clients would also want to understand how this is covered legally in the country of purchase or equity release, how the money for monthly payments will be collected, and what could happen to interest rates in the future even if it appears to be a fixed rate for life so they can get their lawyer to check its validity before parting with any money. To request this is not unreasonable and the information should be readily available.

It would also appear that lending criteria is not always clear as interestingly in the last couple of weeks one client has been told by Ubiquitous that they have a minimum loan size of €150k (when the client only required 60k on a 300k purchase), whereas another client who was buying at 150k and needed 70% was not told there was any minimum.

A valuation fee for an automated valuation is required and often this valuation, according to various comments from previous clients on the web, comes in too low to allow lending.

It is a little strange that the client who only wanted 60k was told of a minimum loan of 150k requiring a minimum valuation level of €215k rather than the minimum €85k valuation that would be needed if he had the loan size he wanted. The more cynical clients might say the minimum loan level quoted was to allow a “get-out” on valuation as it could be difficult to substantiate not achieving 85k valuation on a purchase of €300k even in today’s difficult times.

Automated valuations which apparently Ubiquitous can do in a variety of countries, even those where house price data per region is scant, require no visit to the property and no way of substantiating it, have actually been done. The fee however is as high as for a full formal visit form an authorized valuation company.

Valuation fees are quoted at £239 and despite stating on the website that there are no application fees a registration fee of £95 is also payable. This is £334 for every client who has been told they are approved and who is willing to hand the money over with no guarantee of lending finally being given and with little cost incurred by Ubiquitous who deal online and by email only. Perhaps it is little wonder they have £250k paid up share capital.

International Mortgage Solutions