Slightly complicated mortgage / property renovation finance
Discussion
Evenin' all. Your challenge - should you choose to accept it - is to see if you can help me figure out something to meet one of the following two basic needs:
1. A mortgage that can be completed on in 28 days, will be amenable to the purchase of a property requiring renovation, high LTV (80%+), and at around 3.5x basic annual income / 3x standard income including averaged bonuses... whilst still having another mortgage on a separate property whilst disposing of it.
2. All of the above but with more like a 75% LTV, no other mortgage being held in parallel, and some bridging finance
An even bigger challenge is to read the following deluge of information that explains my thinking, and come up with any better suggestions...
Property I'm looking to buy is being sold via auction mid-September. It's been sold and the purchaser failed to complete on it, so I have a very good feeling of it's value. (Winning big likely to be 4.1x basic income, or 3.1x income including averaged bonuses). The house is currently part-renovated. It was just about getting to second fix stage - all structural work done, electrics, plumbing, drainage, 90% of the plastering and painting of that, etc. *However*, it's missing 80% of the roof tiles (damp proof membrane in place), and most of the windows haven't been fitted - so there's a fair amount of mould. Flooring, kitchen, etc. all to do, plus landscaping and a layer of paint to the outside of the building.
I'd estimate £100k to finish it off to good a saleable state, and £150k to a show-home condition, with that £150k investment returning ~£300k in value on the property. I've renovated houses before, so I'm quite comfortable I know the work that needs doing, timescales of ~12 months, and the costs this will be.
If I manage to win the auction, I have to complete on it within 28 days. This leaves me with two challenges as I see it:
1. Ensuring I can complete within the 28 days regardless.
2. Finding somebody who will give me a mortgage... given the property's state of disrepair, and potentially a mortgage overlapping with my other one for a couple of months / etc.
In terms of completing in the time frame, the options I was thinking of were:
1. Taking out a standard mortgage on the property and having two mortgages in the interim whilst my current property is sold. I'd only - realistically be able to put down a 15% deposit, though. Maybe 20% if I took a personal loan out to help with bridging. Technically I could then afford both mortgages indefinitely - so no crippling burden, but renovation costs would have to wait until I'd sold my current house.
2. A house-for-cash sale at about 20% under-market-value or similar, then taking out a standard mortgage on the property. Obviously, that'll cost me a five figure sum.
3. A bridging loan. With the accompanying ~£5k a month in interest payments (assuming ~15% APR). The worth of doing this vs. (2) being just based on how many months it'd likely take to sell and at what higher price
Obviously, I'd rather go with option (1), or take out a minimal loan via option (3) to just improve the LTV for the second mortgage to a point they'd tolerate it.
Anybody any experience with this? Thoughts? Ideas? Etc??
Serious beerage on offer at BtAP to anybody that can help me snap up my dream house!

1. A mortgage that can be completed on in 28 days, will be amenable to the purchase of a property requiring renovation, high LTV (80%+), and at around 3.5x basic annual income / 3x standard income including averaged bonuses... whilst still having another mortgage on a separate property whilst disposing of it.
2. All of the above but with more like a 75% LTV, no other mortgage being held in parallel, and some bridging finance
An even bigger challenge is to read the following deluge of information that explains my thinking, and come up with any better suggestions...
Property I'm looking to buy is being sold via auction mid-September. It's been sold and the purchaser failed to complete on it, so I have a very good feeling of it's value. (Winning big likely to be 4.1x basic income, or 3.1x income including averaged bonuses). The house is currently part-renovated. It was just about getting to second fix stage - all structural work done, electrics, plumbing, drainage, 90% of the plastering and painting of that, etc. *However*, it's missing 80% of the roof tiles (damp proof membrane in place), and most of the windows haven't been fitted - so there's a fair amount of mould. Flooring, kitchen, etc. all to do, plus landscaping and a layer of paint to the outside of the building.
I'd estimate £100k to finish it off to good a saleable state, and £150k to a show-home condition, with that £150k investment returning ~£300k in value on the property. I've renovated houses before, so I'm quite comfortable I know the work that needs doing, timescales of ~12 months, and the costs this will be.
If I manage to win the auction, I have to complete on it within 28 days. This leaves me with two challenges as I see it:
1. Ensuring I can complete within the 28 days regardless.
2. Finding somebody who will give me a mortgage... given the property's state of disrepair, and potentially a mortgage overlapping with my other one for a couple of months / etc.
In terms of completing in the time frame, the options I was thinking of were:
1. Taking out a standard mortgage on the property and having two mortgages in the interim whilst my current property is sold. I'd only - realistically be able to put down a 15% deposit, though. Maybe 20% if I took a personal loan out to help with bridging. Technically I could then afford both mortgages indefinitely - so no crippling burden, but renovation costs would have to wait until I'd sold my current house.
2. A house-for-cash sale at about 20% under-market-value or similar, then taking out a standard mortgage on the property. Obviously, that'll cost me a five figure sum.
3. A bridging loan. With the accompanying ~£5k a month in interest payments (assuming ~15% APR). The worth of doing this vs. (2) being just based on how many months it'd likely take to sell and at what higher price
Obviously, I'd rather go with option (1), or take out a minimal loan via option (3) to just improve the LTV for the second mortgage to a point they'd tolerate it.
Anybody any experience with this? Thoughts? Ideas? Etc??
Serious beerage on offer at BtAP to anybody that can help me snap up my dream house!


Hi sounds like an exciting project - good luck
By your description I think it will be unlikely the 'new' home will qualify for a standard mortgage (no 2nd fix and kitchen means most surveyors will deem it not habitable....
You might need to look at self build/ rennovation mortgage.
Cheers
By your description I think it will be unlikely the 'new' home will qualify for a standard mortgage (no 2nd fix and kitchen means most surveyors will deem it not habitable....
You might need to look at self build/ rennovation mortgage.
Cheers
qureshia said:
Hi sounds like an exciting project - good luck
By your description I think it will be unlikely the 'new' home will qualify for a standard mortgage (no 2nd fix and kitchen means most surveyors will deem it not habitable....
You might need to look at self build/ rennovation mortgage.
Cheers
Thanks. By your description I think it will be unlikely the 'new' home will qualify for a standard mortgage (no 2nd fix and kitchen means most surveyors will deem it not habitable....
You might need to look at self build/ rennovation mortgage.
Cheers

The lack of tiles on the roof and windows are the things I'd treat as the most "uninhabitable" things.

On that note, anybody tried things like this, know the timescales involved, etc?
http://www.buildstore.co.uk/finance/renovation-con...
qureshia said:
Is the place you are looking at in knutsford ??
Yes it is... Know the one? If so, would be grateful of any info. In particular if the previous owner really did just run out of money, or if anything ropey was found structurally (before he appears to have removed all RSJs from the ground floor...)Edited by qureshia on Thursday 1st September 18:25
Hobo said:
Must be some size to be 150k to 2nd fix.
Re finance, Close Brothers are still funding at decent rates (LIBOR based), and know of a couple of others, but whether would do in the timescale is unknown.
What kind of value property (to nearest 50k) ?
Cheers, chief. Re finance, Close Brothers are still funding at decent rates (LIBOR based), and know of a couple of others, but whether would do in the timescale is unknown.
What kind of value property (to nearest 50k) ?

It's not small... but a bit of previous-owner-sabotage has left a few bills lurking. Value is an interesting one - VERY much open to interpretation given it's not structurally sound, etc. It was last sold at £500k in 2005 before any of the extension works were begun, if that helps!
Think I may have a solution, but really struggling to get some head room on the bridging finance in case of unforeseens. Getting the mortgage at the end of it *guaranteed* before signing up to thousands a month in interest is also proving "worrying"...

Dependant upon timescales for refurb then as said Close are still doing 'development' funding at decent rate assuming you have a track record. Alternatively such as Haydock that would do such finance however would be looking at double digit %'s (although if short term maybe not a massive issue).
I've also found Real Property Finance Limited to be decent guys. Whether they can come up with anything is an unknown however a 30 minute chat won't cost anything and they have decent contacts. You'll find them on internet (Sheffield based).
I've also found Real Property Finance Limited to be decent guys. Whether they can come up with anything is an unknown however a 30 minute chat won't cost anything and they have decent contacts. You'll find them on internet (Sheffield based).
Hobo said:
Dependant upon timescales for refurb then as said Close are still doing 'development' funding at decent rate assuming you have a track record. Alternatively such as Haydock that would do such finance however would be looking at double digit %'s (although if short term maybe not a massive issue).
I've also found Real Property Finance Limited to be decent guys. Whether they can come up with anything is an unknown however a 30 minute chat won't cost anything and they have decent contacts. You'll find them on internet (Sheffield based).
Cheers, chief - much appreciated. I've also found Real Property Finance Limited to be decent guys. Whether they can come up with anything is an unknown however a 30 minute chat won't cost anything and they have decent contacts. You'll find them on internet (Sheffield based).

Sounds like quite a project.
Two ideas - apologies if you have already considered /discounted these:
1. If value is £500k or more, might a commercial development loan be an alternative to a standard mortgage? I believe BoS and others used to do them for development companies to enable you to drawdown on the total mortgage over time to minimise interest costs and keep LTV low e.g. loan to purchase at completion, then lend refurb costs in stages later.
2. Can you use credit cards to help the bridging? Obviously likely to be expensive APR, but low component in relation to your total costs until you sell your home and pay them off.
Hope this helps.
Good luck.
Two ideas - apologies if you have already considered /discounted these:
1. If value is £500k or more, might a commercial development loan be an alternative to a standard mortgage? I believe BoS and others used to do them for development companies to enable you to drawdown on the total mortgage over time to minimise interest costs and keep LTV low e.g. loan to purchase at completion, then lend refurb costs in stages later.
2. Can you use credit cards to help the bridging? Obviously likely to be expensive APR, but low component in relation to your total costs until you sell your home and pay them off.
Hope this helps.
Good luck.
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