Mortgage for an Unmortgageable Property
Discussion
Does anyone know of any financial providers who can lend on a residential property that is currently a shell?
Long story short the vendor bought it as a house and stripped it to a shell. They now want to sell it but it won't qualify for a residential mortgage as it has no kitchen, bathrooms, heating etc etc.
With a mortgage I can afford to buy it and have the work done, but unfortunately I don't have the cash available to buy the whole thing for cash and then have the work done and then the mortgage approved after the works.
Has anyone got any suggestions please? If it means anything the numbers involved are quite large so I don't know if this makes things harder.
Long story short the vendor bought it as a house and stripped it to a shell. They now want to sell it but it won't qualify for a residential mortgage as it has no kitchen, bathrooms, heating etc etc.
With a mortgage I can afford to buy it and have the work done, but unfortunately I don't have the cash available to buy the whole thing for cash and then have the work done and then the mortgage approved after the works.
Has anyone got any suggestions please? If it means anything the numbers involved are quite large so I don't know if this makes things harder.
R11ysf said:
Does anyone know of any financial providers who can lend on a residential property that is currently a shell?
Long story short the vendor bought it as a house and stripped it to a shell. They now want to sell it but it won't qualify for a residential mortgage as it has no kitchen, bathrooms, heating etc etc.
With a mortgage I can afford to buy it and have the work done, but unfortunately I don't have the cash available to buy the whole thing for cash and then have the work done and then the mortgage approved after the works.
Has anyone got any suggestions please? If it means anything the numbers involved are quite large so I don't know if this makes things harder.
Commercial / development finance from a bank?Long story short the vendor bought it as a house and stripped it to a shell. They now want to sell it but it won't qualify for a residential mortgage as it has no kitchen, bathrooms, heating etc etc.
With a mortgage I can afford to buy it and have the work done, but unfortunately I don't have the cash available to buy the whole thing for cash and then have the work done and then the mortgage approved after the works.
Has anyone got any suggestions please? If it means anything the numbers involved are quite large so I don't know if this makes things harder.
They'll need to be confident you know what you're doing, you'll need to have plenty of skin in the deal, pay meaty interest and they'll want security in addition to the shell unless the loan to value is a fraction of the value the property is worth on the open market.
Or you might find a private investor willing to do it, but they'll want even more than the bank.
Eleven said:
Commercial / development finance from a bank?
They'll need to be confident you know what you're doing, you'll need to have plenty of skin in the deal, pay meaty interest and they'll want security in addition to the shell unless the loan to value is a fraction of the value the property is worth on the open market.
Or you might find a private investor willing to do it, but they'll want even more than the bank.
Thanks, a bank loan isn't really an option. I was more thinking are there any development mortgage products out there whereby your borrow on development finance (c. 1% a month or whatever it is) then the moment they are satisfied it meets the criteria of a residential mortgage it flips over.They'll need to be confident you know what you're doing, you'll need to have plenty of skin in the deal, pay meaty interest and they'll want security in addition to the shell unless the loan to value is a fraction of the value the property is worth on the open market.
Or you might find a private investor willing to do it, but they'll want even more than the bank.
R11ysf said:
Eleven said:
Commercial / development finance from a bank?
They'll need to be confident you know what you're doing, you'll need to have plenty of skin in the deal, pay meaty interest and they'll want security in addition to the shell unless the loan to value is a fraction of the value the property is worth on the open market.
Or you might find a private investor willing to do it, but they'll want even more than the bank.
Thanks, a bank loan isn't really an option. I was more thinking are there any development mortgage products out there whereby your borrow on development finance (c. 1% a month or whatever it is) then the moment they are satisfied it meets the criteria of a residential mortgage it flips over.They'll need to be confident you know what you're doing, you'll need to have plenty of skin in the deal, pay meaty interest and they'll want security in addition to the shell unless the loan to value is a fraction of the value the property is worth on the open market.
Or you might find a private investor willing to do it, but they'll want even more than the bank.
But a lender of whatever colour is going to want you to have plenty in the deal yourself and, I would think, a fair lump of fees and interest.
Wouldn't this usually be done with bridging finance (at circa 1% interest per month) and then remortgaged when works are complete onto standard resi product?
I think there are a couple of refurb products available but I believe you would need to show development experience to be approved.
Speak to a good broker - sarnie?
I think there are a couple of refurb products available but I believe you would need to show development experience to be approved.
Speak to a good broker - sarnie?
I did a similar thing, although it was in 2006 when things weren't so deadly in the market.
I spotted a commercial premises in a popular North Norfolk village, the middle of a residential area, where a lot of re-development had already happened, and this was the last nasty old building in the street, basically spoiling the look of the rest of the development.
It was a small printers, consisting of a 100-year old single-storey detached cottage style building, that many years ago was originally residential. It has a nice old brick-and-flint finish to the outside, with walls about a foot thick. The owner was retiring and selling up the business.
I was convinced that I could buy it, put in planning to convert back to residential, strip it, build a first floor with a bedroom and bathroom, and convert it back into a lovely residential cottage.
Anyway, like you, because of how knackered it was, with basically nothing inside - I couldn't get a mortgage either for the same reasons. I spoke to a few brokers, one of whom managed to find a lender who was prepared to lend half the purchase price up front, and then change the product to a full residential mortgage once development had finished.
There was no guarantee that I would get planning to convert, but as I was feeling lucky (punk) I pulled the pin.
The purchase price was 70 grand, with an estimated redevelopment cost of 35 grand. So I needed 105 in total.
I got 35 from the lender, and put the remaining 70 grand on credit cards. Oh yes I did!
I already had 5 cards with a 10 grand limit, so I just applied for 3 more, and got them.
I borrowed 35 grand on the cards at first to buy it, and then borrowed another 35 over the next 3 months to pay for the development. The combined interest over the cards after borrowing was 1500 a month - for which I used the last, empty card to pay for each month. So yeah, using credit to pay the fees on credit. Terrifying!
Then again, I was only 30, and not scared of anything
Pleased to say that, I got planning very quickly (my architect knew someone at the local council, imagine that
) and the development was completed within 4 months total. I then got a new, residential buy to let mortgage on it which paid off the total 110 grand of lending, including the 70 grand on the credit cards, haha!
It was then valued at 165 grand. Thanks very much. I still have it now, it's a great little buy to let still!
So - there are always unconventional methods of borrowing, if you're brave enough op? Worked for me.
I spotted a commercial premises in a popular North Norfolk village, the middle of a residential area, where a lot of re-development had already happened, and this was the last nasty old building in the street, basically spoiling the look of the rest of the development.
It was a small printers, consisting of a 100-year old single-storey detached cottage style building, that many years ago was originally residential. It has a nice old brick-and-flint finish to the outside, with walls about a foot thick. The owner was retiring and selling up the business.
I was convinced that I could buy it, put in planning to convert back to residential, strip it, build a first floor with a bedroom and bathroom, and convert it back into a lovely residential cottage.
Anyway, like you, because of how knackered it was, with basically nothing inside - I couldn't get a mortgage either for the same reasons. I spoke to a few brokers, one of whom managed to find a lender who was prepared to lend half the purchase price up front, and then change the product to a full residential mortgage once development had finished.
There was no guarantee that I would get planning to convert, but as I was feeling lucky (punk) I pulled the pin.
The purchase price was 70 grand, with an estimated redevelopment cost of 35 grand. So I needed 105 in total.
I got 35 from the lender, and put the remaining 70 grand on credit cards. Oh yes I did!
I already had 5 cards with a 10 grand limit, so I just applied for 3 more, and got them. I borrowed 35 grand on the cards at first to buy it, and then borrowed another 35 over the next 3 months to pay for the development. The combined interest over the cards after borrowing was 1500 a month - for which I used the last, empty card to pay for each month. So yeah, using credit to pay the fees on credit. Terrifying!
Then again, I was only 30, and not scared of anything
Pleased to say that, I got planning very quickly (my architect knew someone at the local council, imagine that
) and the development was completed within 4 months total. I then got a new, residential buy to let mortgage on it which paid off the total 110 grand of lending, including the 70 grand on the credit cards, haha!It was then valued at 165 grand. Thanks very much. I still have it now, it's a great little buy to let still!
So - there are always unconventional methods of borrowing, if you're brave enough op? Worked for me.
This used to be possible with 'Staged Mortgages' however my knowledge of these is dated from before the current tightening of eligibility in the Mortgage market.
One thing you should look into is Renovation Grants which are available to bring uninhabitable residential property back into use.
http://local.direct.gov.uk/LDGRedirect/index.jsp?L...
Ray Luxury-Yacht said:
I did a similar thing, although it was in 2006 when things weren't so deadly in the market.
I spotted a commercial premises in a popular North Norfolk village, the middle of a residential area, where a lot of re-development had already happened, and this was the last nasty old building in the street, basically spoiling the look of the rest of the development.
It was a small printers, consisting of a 100-year old single-storey detached cottage style building, that many years ago was originally residential. It has a nice old brick-and-flint finish to the outside, with walls about a foot thick. The owner was retiring and selling up the business.
I was convinced that I could buy it, put in planning to convert back to residential, strip it, build a first floor with a bedroom and bathroom, and convert it back into a lovely residential cottage.
Anyway, like you, because of how knackered it was, with basically nothing inside - I couldn't get a mortgage either for the same reasons. I spoke to a few brokers, one of whom managed to find a lender who was prepared to lend half the purchase price up front, and then change the product to a full residential mortgage once development had finished.
There was no guarantee that I would get planning to convert, but as I was feeling lucky (punk) I pulled the pin.
The purchase price was 70 grand, with an estimated redevelopment cost of 35 grand. So I needed 105 in total.
I got 35 from the lender, and put the remaining 70 grand on credit cards. Oh yes I did! I already had 5 cards with a 10 grand limit, so I just applied for 3 more, and got them.
I borrowed 35 grand on the cards at first to buy it, and then borrowed another 35 over the next 3 months to pay for the development. The combined interest over the cards after borrowing was 1500 a month - for which I used the last, empty card to pay for each month. So yeah, using credit to pay the fees on credit. Terrifying!
Then again, I was only 30, and not scared of anything
Pleased to say that, I got planning very quickly (my architect knew someone at the local council, imagine that ) and the development was completed within 4 months total. I then got a new, residential buy to let mortgage on it which paid off the total 110 grand of lending, including the 70 grand on the credit cards, haha!
It was then valued at 165 grand. Thanks very much. I still have it now, it's a great little buy to let still!
So - there are always unconventional methods of borrowing, if you're brave enough op? Worked for me.
The OP said he will have seven figures in the deal himself, so I am not sure a handful of credit cards is going to take him where he needs to be.I spotted a commercial premises in a popular North Norfolk village, the middle of a residential area, where a lot of re-development had already happened, and this was the last nasty old building in the street, basically spoiling the look of the rest of the development.
It was a small printers, consisting of a 100-year old single-storey detached cottage style building, that many years ago was originally residential. It has a nice old brick-and-flint finish to the outside, with walls about a foot thick. The owner was retiring and selling up the business.
I was convinced that I could buy it, put in planning to convert back to residential, strip it, build a first floor with a bedroom and bathroom, and convert it back into a lovely residential cottage.
Anyway, like you, because of how knackered it was, with basically nothing inside - I couldn't get a mortgage either for the same reasons. I spoke to a few brokers, one of whom managed to find a lender who was prepared to lend half the purchase price up front, and then change the product to a full residential mortgage once development had finished.
There was no guarantee that I would get planning to convert, but as I was feeling lucky (punk) I pulled the pin.
The purchase price was 70 grand, with an estimated redevelopment cost of 35 grand. So I needed 105 in total.
I got 35 from the lender, and put the remaining 70 grand on credit cards. Oh yes I did!
I already had 5 cards with a 10 grand limit, so I just applied for 3 more, and got them. I borrowed 35 grand on the cards at first to buy it, and then borrowed another 35 over the next 3 months to pay for the development. The combined interest over the cards after borrowing was 1500 a month - for which I used the last, empty card to pay for each month. So yeah, using credit to pay the fees on credit. Terrifying!
Then again, I was only 30, and not scared of anything
Pleased to say that, I got planning very quickly (my architect knew someone at the local council, imagine that
) and the development was completed within 4 months total. I then got a new, residential buy to let mortgage on it which paid off the total 110 grand of lending, including the 70 grand on the credit cards, haha!It was then valued at 165 grand. Thanks very much. I still have it now, it's a great little buy to let still!
So - there are always unconventional methods of borrowing, if you're brave enough op? Worked for me.
Eleven said:
Ray Luxury-Yacht said:
Used credit cards
The OP said he will have seven figures in the deal himself, so I am not sure a handful of credit cards is going to take him where he needs to be.OP, are you trying to buy this?
OT, @RL-Y, is there anything you HAVEN'T done, you seem to have lived an extremely full life, since you have tales to tell on an awful lot of subjects posted all over PH?
Ray Luxury-Yacht said:
I got 35 from the lender, and put the remaining 70 grand on credit cards. Oh yes I did! I already had 5 cards with a 10 grand limit, so I just applied for 3 more, and got them.
I borrowed 35 grand on the cards at first to buy it, and then borrowed another 35 over the next 3 months to pay for the development. The combined interest over the cards after borrowing was 1500 a month - for which I used the last, empty card to pay for each month. So yeah, using credit to pay the fees on credit. Terrifying!
I bet you slept well! I already had 5 cards with a 10 grand limit, so I just applied for 3 more, and got them. I borrowed 35 grand on the cards at first to buy it, and then borrowed another 35 over the next 3 months to pay for the development. The combined interest over the cards after borrowing was 1500 a month - for which I used the last, empty card to pay for each month. So yeah, using credit to pay the fees on credit. Terrifying!
CAPP0 said:
OT, @RL-Y, is there anything you HAVEN'T done, you seem to have lived an extremely full life, since you have tales to tell on an awful lot of subjects posted all over PH?
Haha, thanks for noticing! All I can say is that I have been a very lucky boy in this life so far. I had a fairly average upbringing, went to average schools, certainly haven't had anything handed to me on a plate. One thing that I WAS fortunate to have though, is a pair of very loving, supportive parents who invested so much time and I suppose money, in trying to ensure that I ended up the best person I could be. I am very grateful for that. Then apart from a handful of relationships where I have moved in with girls, only for it to end on average 4 years later
I have been mainly single, have never married, and have never had children. Combined with working in the printing industry until it went tits up about 10 years ago, I have been fortunate to earn decent money for most of my life, and have it all available at my disposal to use how I saw fit. A large chunk of it has been blown on enjoying myself, buying many varied life experiences like racing, flying etc. - but at the same time, I also recognised the value of investing some of it too - hence I got into property in 2000, leaving me with the half-dozen or so houses that I now own and let out, giving me a hopefully secure future despite my huge spending! A couple of the houses were development projects like I talk about above - which were also great fun and really interesting to get involved in.
Hence, with a reasonable brain, which again I am grateful for, combined with a bit of - some might say - a reckless attitude to risk, it's been a ball so far, and I cannot complain. In my early 40's now, I can honestly say that if I got run over by a bus tomorrow, I would accept it with good grace because of the amount of things that I have managed to fit into my life!
My basic philosophy has revolved around two things.
Firstly, every day is a school day, no-one knows it all, there is always the opportunity to learn about anything - and that by listening more than talking, especially when I am around someone wiser than I - there is always a chance to find out something new, and even give something new a go by myself. I also have the confidence to think that everything that has ever been achieved on this earth has been done by humans, of which I am one, so that means nothing is impossible to me, and that I can do anything. That confidence has seen me fail in some things, but again those are learning opportunities, and no-one ever made anything by sitting doing nothing, right?
Secondly, NO-ONE knows why we are here - not philosophers, scientists, religionists, anyone. It would be easy to be scared, nervous, and disillusioned in life - especially if one absorbs too much scaremongering, politics, international disasters and 99% of the crap pedelled to us via the TV and the media. As one might observe, a large degree of output is specifically designed to worry and unnerve, in order to keep people in their place, prevent dissent, and worst of all - sell useless products to us.
If one manages to rise above all that, like I do, and just return to a simple evaluation of life - it becomes easy to subscribe to the 'bleeding obvious' that is all around us, but not many actually see. That is, we're just fortunate enough to have been given life on this amazing planet for whatever reason, in the same way that any animals have been. Yes, I understand that animals only think about basic needs and their next meal - but that is as complicated as it gets for them. I am not suggesting that as humans we go feral obviously! I am suggesting that we sometimes make life a great deal more complicated than it needs to be. Fact of the matter is, we live in an incredible, beautiful and diverse world, with so much beauty around us to enjoy, and so many amazing opportunities to enjoy life, engage with whatever we want to engage with, and above all - have FUN! I understand that there are days when we are compromised, and won't be very happy - that's just the way it goes. But I really try to find value in every moment I spend alive, I try to smile way more than I frown, and I am happy to have a go at anything that I think I might enjoy, and that I will learn and benefit from.
Does that all make sense? I don't come on PH and pretend to be an expert on anything, gloat, or patronise anyone. However due to my philosophy in life, I have been lucky to have been involved in so many diverse things, that I can post with a bit of experience on many topics which come up on here! Which I really enjoy, I do love this forum and the things people talk about - it's great to be involved, and I wouldn't have stayed for so long otherwise!
Anyway - sorry for the thread derailment OP!
trowelhead said:
Wouldn't this usually be done with bridging finance (at circa 1% interest per month) and then remortgaged when works are complete onto standard resi product?
I think there are a couple of refurb products available but I believe you would need to show development experience to be approved.
Speak to a good broker - sarnie?
^^^ What he said.I think there are a couple of refurb products available but I believe you would need to show development experience to be approved.
Speak to a good broker - sarnie?
Development finance is for professional developers and high street banks (mortgage lenders) won't touch this with a barge pole. You'll be able to get about a 70% LTV Bridging Loan on the property for approx up to 12 months at about 0.8-0.9% per month (depending on location/nature of the property) but you won't have to make any monthly payments as it all rolls up to be paid off in one hit at the end. I did something similar a little while ago. Shoot me a PM if you need any further guidance.
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