Funding a second house to renovate?

[M12GTO]

Hi all, I'm thinking of buying a project house to fix up in my spare time. Might go halves with a friend, not sure yet. Probably have it done up and sold within 6 months. Just wondering what the best way to fund it might be?

I'm in the middle of a 5 year fixed rate mortgage and have around 120k equity in my house. Still 25 years left to pay.
I could get around £20k cash from savings etc
No debt apart from mortgage.

House I'm looking at will be around 100k and possibly need 20k spent on it.

[Sarnie]

Further advance from current lender..............

[gr1340]

Don't forgot to factor in stamp duty as it will be classed as a second home which is 3% so 3k on your 100k property.

[cerberaperv]

M12GTO said:

Probably have it done up and sold within 6 months. Just wondering what the best way to fund it might be

I take it you are not aware of the 6mth rule/guideline that lenders have when lending money to homebuyers?
One of the questions on the legal pack is ` how long has the current owner owned the property?/ have they owned it less than 6mths?`

Now this won’t affect you as a cash/ bridge loan buyer but it will affect your buyer when you try and sell within 6mths. Unless your buyer is a cash buyer but at the amount you are talking, they will probably be first time buyers.

It can really throw a spanner in the works depending on how you structure it.

[M12GTO]

cerberaperv said:

I take it you are not aware of the 6mth rule/guideline that lenders have when lending money to homebuyers?
One of the questions on the legal pack is ` how long has the current owner owned the property?/ have they owned it less than 6mths?`

Now this won’t affect you as a cash/ bridge loan buyer but it will affect your buyer when you try and sell within 6mths. Unless your buyer is a cash buyer but at the amount you are talking, they will probably be first time buyers.

It can really throw a spanner in the works depending on how you structure it.

Thanks for pointing that out, I wasn't aware of that at all. It's my first venture so I've loads to learn. How does that affect the person buying the house if it's been owned for less than 6 months?

Also is there a good book or someone it might be worth talking to about all the ins and outs of this type of thing?

[paulwirral]

Keep in mind that it'll cost you around 6k to actually buy and sell the house in fees and stamp duty alone , and that's a very conservative figure .
I used to do this and now I find it's not really worthwhile once you've paid everyone . It's a real world 9 month cycle before you get paid out on the sale , and that's assuming it sells straight away . Then there's your tax to pay !
Good luck if you proceed but keep your eyes wide open , I was lucky enough to not have to borrow so I had no monthly outgoings apart from normal bills , electric, gas , council tax and the like .
I also did all the work myself barring gas and electrics and it always took around 3 months to renovate for a typical 3 bed semi .