Need a mortgage to buy a Fixer Upper (Uninhabitable House)

[56Lotus]

Hope someone can help

We have been given the opportunity to purchase our late neighbours house. He lived in the house for 83 years but never modified anything. Subsequently the house has been deemed to be uninhabitable and we are struggling to get a mortgage on the property through a highly recommended local mortgage broker.

The property has been valued twice now and both surveyors have deemed the property to be uninhabitable as there is no real kitchen, the bathroom is very dated, there is no heating and the wiring is ancient. the roof is only a few years old but the windows are wooden and need attention. Just to add more the property is Grade 2 listed. There is also damage to an area of flooring where a piano was dropped by the house clearance people; an old joist has snapped and some boards are broken. It looks bad but isn't really. The house also needs completely redecorating.

We've agreed a sale price of £280,000 with the executers and have released a 25% deposit from the equity in our house. The house has been valued at more than this figure.

Our original thought was an interest only BTL with space to renovate the property, and the broker recommended Santander, but this has come back as refused, we don't have the full reasons yet.

Affordability isn't a problem, we just need someone who will lend on an uninhabitable house.

We don't really want to go the bridging loan route as the fees are very high.

Can any one recommend a mortgage company/ product that is suitable for this? We need a mortgage for £210,000 on a house deemed uninhabitable.

Thanks

Jon

[Sarnie]

You need renovation finance.............no high street lender will touch it in the current condition.

Forget Santander, they won't do it.

[Louis Balfour]

56Lotus said:

Hope someone can help

We have been given the opportunity to purchase our late neighbours house. He lived in the house for 83 years but never modified anything. Subsequently the house has been deemed to be uninhabitable and we are struggling to get a mortgage on the property through a highly recommended local mortgage broker.

The property has been valued twice now and both surveyors have deemed the property to be uninhabitable as there is no real kitchen, the bathroom is very dated, there is no heating and the wiring is ancient. the roof is only a few years old but the windows are wooden and need attention. Just to add more the property is Grade 2 listed. There is also damage to an area of flooring where a piano was dropped by the house clearance people; an old joist has snapped and some boards are broken. It looks bad but isn't really. The house also needs completely redecorating.

We've agreed a sale price of £280,000 with the executers and have released a 25% deposit from the equity in our house. The house has been valued at more than this figure.

Our original thought was an interest only BTL with space to renovate the property, and the broker recommended Santander, but this has come back as refused, we don't have the full reasons yet.

Affordability isn't a problem, we just need someone who will lend on an uninhabitable house.

We don't really want to go the bridging loan route as the fees are very high.

Can any one recommend a mortgage company/ product that is suitable for this? We need a mortgage for £210,000 on a house deemed uninhabitable.

Thanks

Jon

My first port of call would be the bank; commercial finance. Though 75% LTV, on an un-mortgageable property, in the current climate, to an inexperienced developer, who has had to refinance his home for the deposit sounds ambitious.

[Hashtaggggg]

I am not an expert but would have thought you basically have no chance getting a loan from a bank etc..

Can a family member help out with the purchase?

[Mortgage_tom]

Sarnie said:

You need renovation finance.............no high street lender will touch it in the current condition.

Forget Santander, they won't do it.

As above.


Even with specialist finance, you will need to be at 65%LTV. I don't think it can be done at 75%LTV at the moment.

No kitchen is the biggest problem. But also be aware that for a buy to let mortgage most lender with be looking for the place to be EPC E or better.

[JQ]

Mortgage_tom said:

Sarnie said:

You need renovation finance.............no high street lender will touch it in the current condition.

Forget Santander, they won't do it.

As above.


Even with specialist finance, you will need to be at 65%LTV. I don't think it can be done at 75%LTV at the moment.

No kitchen is the biggest problem. But also be aware that for a buy to let mortgage most lender with be looking for the place to be EPC E or better.

Out of interest, would the lender also like to see cash in place to complete the renovation in advance of the loan?

[Mortgage_tom]

JQ said:

Out of interest, would the lender also like to see cash in place to complete the renovation in advance of the loan?

Pretty much, its got to be a feasible scenario. The exit has to be confirmed.

[derek.j]

Can you not just come to an agreement with the seller to chuck a cheap bnq kitchen and bathroom in first then get a mortgage

[NickCQ]

derek.j said:

Can you not just come to an agreement with the seller to chuck a cheap bnq kitchen and bathroom in first then get a mortgage

I imagine the fact it's an executor sale makes that harder - presumably would need to get consent of all the beneficiaries of the will and if the estate doesn't have the cash it's not clear how it could be funded.

[derek.j]

NickCQ said:

I imagine the fact it's an executor sale makes that harder - presumably would need to get consent of all the beneficiaries of the will and if the estate doesn't have the cash it's not clear how it could be funded.

I meant more in the purchaser fit a kitchen and bathroom temporarily out of there own pocket in order to complete the mortgage

[Louis Balfour]

derek.j said:

NickCQ said:

I imagine the fact it's an executor sale makes that harder - presumably would need to get consent of all the beneficiaries of the will and if the estate doesn't have the cash it's not clear how it could be funded.

I meant more in the purchaser fit a kitchen and bathroom temporarily out of there own pocket in order to complete the mortgage

If I were going to do that, I'd want an Option to Buy Land agreement in place, because the property will have suddenly become worth more as a mortgageable property.

[Blakeatron]

Our current house was classed as uninhabitable when we purchased approx 4 years ago.
The only way we could get a mortgage was to put 50% down.

That was everything we had, so we then sold everything we had - cars, bikes, jewellery, paintings, Electrical’s - anything that had any value.
We scrapped together another £100k which covered the renovations and then we remortgaged and bought replacements for the items we wished we hadnt sold!

Where there is a will...

[Sarnie]

Blakeatron said:

Our current house was classed as uninhabitable when we purchased approx 4 years ago.
The only way we could get a mortgage was to put 50% down.

That was everything we had, so we then sold everything we had - cars, bikes, jewellery, paintings, Electrical’s - anything that had any value.
We scrapped together another £100k which covered the renovations and then we remortgaged and bought replacements for the items we wished we hadnt sold!

Where there is a will...

It must have been habitable to get a mortgage on it...................

[NickCQ]

Louis Balfour said:

If I were going to do that, I'd want an Option to Buy Land agreement in place, because the property will have suddenly become worth more as a mortgageable property.

That's a neat solution - you could pay, say, £10k for the option and then they would use that to put a kitchen in. Option premium to be deducted from the agreed sale price.

[JQ]

NickCQ said:

Louis Balfour said:

If I were going to do that, I'd want an Option to Buy Land agreement in place, because the property will have suddenly become worth more as a mortgageable property.

That's a neat solution - you could pay, say, £10k for the option and then they would use that to put a kitchen in. Option premium to be deducted from the agreed sale price.

A simpler solution for the vendor would just be to sell it to a cash buyer.

[Louis Balfour]

JQ said:

NickCQ said:

Louis Balfour said:

If I were going to do that, I'd want an Option to Buy Land agreement in place, because the property will have suddenly become worth more as a mortgageable property.

That's a neat solution - you could pay, say, £10k for the option and then they would use that to put a kitchen in. Option premium to be deducted from the agreed sale price.

A simpler solution for the vendor would just be to sell it to a cash buyer.

We aren't trying to help the vendor.

[JQ]

Louis Balfour said:

JQ said:

NickCQ said:

Louis Balfour said:

If I were going to do that, I'd want an Option to Buy Land agreement in place, because the property will have suddenly become worth more as a mortgageable property.

That's a neat solution - you could pay, say, £10k for the option and then they would use that to put a kitchen in. Option premium to be deducted from the agreed sale price.

A simpler solution for the vendor would just be to sell it to a cash buyer.

We aren't trying to help the vendor.

No, but the OP suggesting to the executors of the estate that they enter into option agreements which require them to complete refurbishment works to the property to enable him to buy it as he can't afford it, may not result in a positive outcome. He wouldn't be negotiating with his neighbour, he's dealing with a group of people not emotionally involved with the property who just want their money out as quickly as possible. It's why properties such as this are generally sold to cash buyers. If they wanted to maximise their profits, they'd refurbish it themselves,

If the OP really wants to do it, then my recommendation would to take the hit on the short term finance costs and just stick an eBay kitchen in the property once complete and re-finance with a more traditional lender. If the the costs involved in that make it unprofitable then it's probably not worth doing in the first place.

[Louis Balfour]

JQ said:

Louis Balfour said:

JQ said:

NickCQ said:

Louis Balfour said:

If I were going to do that, I'd want an Option to Buy Land agreement in place, because the property will have suddenly become worth more as a mortgageable property.

That's a neat solution - you could pay, say, £10k for the option and then they would use that to put a kitchen in. Option premium to be deducted from the agreed sale price.

A simpler solution for the vendor would just be to sell it to a cash buyer.

We aren't trying to help the vendor.

No, but the OP suggesting to the executors of the estate that they enter into option agreements which require them to complete refurbishment works to the property to enable him to buy it as he can't afford it, may not result in a positive outcome. He wouldn't be negotiating with his neighbour, he's dealing with a group of people not emotionally involved with the property who just want their money out as quickly as possible. It's why properties such as this are generally sold to cash buyers. If they wanted to maximise their profits, they'd refurbish it themselves,

If the OP really wants to do it, then my recommendation would to take the hit on the short term finance costs and just stick an eBay kitchen in the property once complete and re-finance with a more traditional lender. If the the costs involved in that make it unprofitable then it's probably not worth doing in the first place.

I don't disagree with you. If I were an executor I would be selling on the open market. Unless the area is awful there always seems to be someone willing to pay a good price for a wreck. But perhaps the OP has a good relationship with the executors and the executors see value in a sale to him.

I also agree about bridging finance, in the OP's situation.

Whilst we don't know why the OP wants the property, it does seem that he is rather stretching himself to buy the place. If it has had nothing much done to it for the period of time suggested, it could be financially disastrous and not something to be tackled with a tight budget. We've refurbished a number of such properties and they can absolutely eat through cash. I cannot recall one that was an absolute steal!

[princeperch]

I know of someone who was in a similar position a couple of years back, the house was owned by an old person going into care and they were motivated to sell, but it didn't have a proper bathroom, it had a shower in one of the bedrooms and no sink or toilet. The only toilet was a downstairs wc. All the lenders he tried declined. In the end with the agreement of the vendor the chap installed a 50 quid toilet and sink from b and q In the bedroom with the shower and he eventually got a mortgage on it.

The funny thing was the toilet wasn't even properly connected up and was a toilet to nowhere- and the valuation surveyor didn't care!

[catfood12]

OP, I did similar many years ago. I exchanged, with access allowed and 90 day completion. I also instructed the solicitor to handle my deposit as agents, so it was passed to the vendors prior to completion. This allowed them some cash to deal with expenses, but guaranteed the balance would be in when they had to pay the death duties.

I then spent the three months getting the place up together and mortgageable. Clearly there's a big risk if you fail to complete for any reason, or your mortgage is turned down for personal reasons, as opposed to the property.