Mortgage mistakes to avoid for both first-time buyers and wealthy individuals | Future Focus
On this week's episode of Yahoo Finance Future Focus, our host Brian McGleenon sits down with Islay Robinson, CEO of Enness Global, to unravel the complexities of the mortgage market. Robinson shares invaluable advice for anyone seeking a mortgage, stressing the importance of exploring a wide range of lending options and being thoroughly prepared with documentation. The interview further delves into the benefits of owning assets over holding cash, with Robinson explaining that property remains a safe and profitable investment for wealthy individuals. He also discusses the impact of recent interest rate changes and tax considerations on mortgage decisions. Additionally, Robinson touches on Enness Global's broad experience in financing diverse assets, including businesses, liquid shares, cryptocurrencies, and even unique assets like bloodstock.
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00:00Today on Yahoo Finance Future Focus, we are joined by NS Global CEO Isla Robinson to discuss
00:11the problems in accessing mortgages for first-time buyers seeking to gain a foothold on the property
00:16ladder and also for high net worth individuals.
00:19Isla, welcome to the show.
00:21Thanks for having me.
00:22Good morning.
00:24What's the most important piece of advice you would offer somebody seeking a mortgage?
00:27So, two pieces of advice.
00:29Number one, don't only speak to your own bank.
00:32So, lots of our customers go to university or they get their first bank account and it's
00:36with a high street bank and it's really easy to go to your bank and ask them what they'll
00:42do for you.
00:43And that's what 90%, 80% of people do when they're buying their first property.
00:47There are hundreds of lenders that exist that help first-time buyers, international buyers,
00:52high net worth people.
00:53We work with three or four, 500 lenders from across the world.
00:56So, if you speak to your own bank, you've got a 1 in 500 shot of finding the best mortgage
01:01for you.
01:02And then the second piece of advice is be organized.
01:05To get a mortgage in the U.K., lenders work on effectively a binary decision-making process.
01:12So, there's 100 data points that they have to ask and you need to get a yes on 90 of
01:19them, your age, your income, your deposit and so on and so forth.
01:23So, you need to get your documentation and your paperwork together in a way that allows
01:27the bank to answer those questions.
01:30Would you say it's better to own, whether it's property or intellectual property, than
01:35to hold cash?
01:36I think so.
01:37Wealthy people buy property.
01:39That's a fact, okay?
01:40And they buy it because it's a good investment, it's a safe place to put their asset, it's
01:44something that they can talk about and enjoy and everything else.
01:47That's why property is bought.
01:49Now, when interest rates were very, very low, it was very efficient to buy a property with
01:55a mortgage.
01:56Your interest rate would be 1% or 2%.
01:59And with that cash, you can hold it in stocks or shares or your business or in crypto or
02:03anything else that would produce a higher return.
02:06And then net of tax, your income would pay for the mortgage.
02:10So, that's quite straightforward.
02:11Now, you need to take into account your tax rates, where you are in the world, the cost
02:16of servicing and everything else.
02:17But generally, in a low interest rate environment, and where you can get high returns, taking
02:22a mortgage is a good idea.
02:23Are there any other alternative investment approaches towards real estate investing?
02:29I've read that there's such things as real estate investment trusts.
02:32Could you give us some more examples of this?
02:34Within Ennis, we can finance practically anything, and we have done over the years.
02:40So, real estate is the obvious one, okay?
02:43So, mortgage broker, that's a concept that's well known.
02:47We arrange finance against businesses, so corporate finance, which allows money to be
02:52put into the business, which the owners can then extract in efficient ways.
02:57We've arranged money, we've arranged loans against liquid shares, so kind of securities
03:04on the stock market.
03:05We've arranged loans against crypto, which at the moment, it's good.
03:09You know, 12 months ago, it was a little bit harder to do that, given the volatility in
03:14that asset class in particular.
03:16But then further, cars or boats or, you know, a couple of weeks ago, we did a loan against
03:23some blood stock, which is horsies.
03:25Okay.
03:26Can you use Bitcoin as a collateral to borrow against in the UK?
03:29You can, yep.
03:30Okay.
03:31So, Bitcoin is an asset class, and one of the underlying features of Bitcoin is it's
03:36a secure, it's on the ledger.
03:39Everyone knows where it is and how it's owned, and it can't be moved, so it is a security,
03:44and that makes sense.
03:45So, there's lots of lenders that will lend.
03:48Some of the big crypto houses, like Galaxy and so on, will lend against crypto.
03:53There's a growing number of Swiss private banks that will lend against crypto, and there's
03:58a lot of alternative or secondary lenders that will as well.
04:02So, if you look across the whole lending landscape, there are ways to borrow against crypto.
04:06Do you foresee a time when maybe we could have Bitcoin-backed mortgages in the UK?
04:10Because I think they're happening in the US.
04:12There's a lender in the US that does already.
04:15We're familiar.
04:16We've been kind of tracking their progress.
04:19People have made substantial sums in crypto, and they use the proceeds of that to buy property.
04:25We were talking this morning, the average age of a 20 million plus buyer in London at
04:32the moment has reduced from 60 10 years ago to 40 today, and a lot of that is fueled by
04:38crypto or other kind of new ways of earning money.
04:43There's lots of other ways of making income now, other than sitting at a desk, you know.
04:47I don't sit at a desk.
04:48I run a couple of companies, and people do make their income in less traditional ways
04:53now, and I think that- And lenders are catching up with this?
04:56Lenders aren't catching up quite as quickly as you would think.
04:59So, I think if you walked into a high street lender in the UK and said, I make my money
05:06through the gig economy, some freelancing, I do some trading, I own some crypto, they
05:12wouldn't understand what you're talking about, and they would probably just ask you to leave.
05:16Okay.
05:17So, we had a client a couple of years ago that had a very wealthy customer from a very,
05:24very prominent background, and his assets were property and businesses, and he had two
05:31things.
05:32One was some Ether, Ethereum, and the other one was a holding in a Dutch porn website.
05:39Okay.
05:40The bank didn't have a problem with the porn website.
05:42They had a problem that he had some crypto.
05:43So, that's how lots of lenders still look at digital assets.
05:47Eileen Robinson, thanks very much for coming on this week's episode of Yahoo Finance Future
05:51Focus.
05:52Thanks ever so much.