Loan Against A House With No Income Until Sold
Discussion
If I have house "A" worth £1M with land at the side
And I want to borrow £400k to build two homes "B" and "C" on the land but I have no income until I sell house A
Who would I approach and roughly what kind of fees / rates would I expect to pay ?
House A cannot be sold until B and C are built, I could pay repayments out of the £400k loan but would have no income, I'd want 2 yrs to cater for any eventualities
This used to be common place using Self Cert Mortgages but what are the current options ?
And I want to borrow £400k to build two homes "B" and "C" on the land but I have no income until I sell house A
Who would I approach and roughly what kind of fees / rates would I expect to pay ?
House A cannot be sold until B and C are built, I could pay repayments out of the £400k loan but would have no income, I'd want 2 yrs to cater for any eventualities
This used to be common place using Self Cert Mortgages but what are the current options ?
V8RX7 said:
This used to be common place using Self Cert Mortgages but what are the current options ?
This isn't what self certification mortgages were for. You still needed to have income.............I'm not aware of anyone that would lend money knowing that the applicant had no way of repaying it........
Sarnie said:
This isn't what self certification mortgages were for. You still needed to have income.............
I'm not aware of anyone that would lend money knowing that the applicant had no way of repaying it........
It isn't what they were intended for, it is what many builders used them for.I'm not aware of anyone that would lend money knowing that the applicant had no way of repaying it........
The applicant would have the way of repaying it, when they sold the £1M house they currently own.
I think what you might need to do is split the land from your main residence. A mortgage on your principle residence has to be fully regulated and as such would have to meet all of the usual lending criteria with regards to income coverage etc. Definitely worth speaking to a specialist broker.
If you have no income, get planning and sell.
At best you'd be looking at least 1% a month, and you'd need serious building experience, to get a 100% build loan.
12 month build 6 month marketing, so say 72k in interest (+), 12k + in fees + legals (X) + vals (x) + Monitoring so say 100k.
Oh and quite a bit of CGT once the houses sold (or land transferred into SPV co).
If its a big bit of land, would it be worth more with your place demolished (with the right planning in place)?
At best you'd be looking at least 1% a month, and you'd need serious building experience, to get a 100% build loan.
12 month build 6 month marketing, so say 72k in interest (+), 12k + in fees + legals (X) + vals (x) + Monitoring so say 100k.
Oh and quite a bit of CGT once the houses sold (or land transferred into SPV co).
If its a big bit of land, would it be worth more with your place demolished (with the right planning in place)?
Deesee said:
If you have no income, get planning and sell.
At best you'd be looking at least 1% a month, and you'd need serious building experience, to get a 100% build loan.
12 month build 6 month marketing, so say 72k in interest (+), 12k + in fees + legals (X) + vals (x) + Monitoring so say 100k.
Oh and quite a bit of CGT once the houses sold (or land transferred into SPV co).
If its a big bit of land, would it be worth more with your place demolished (with the right planning in place)?
Unfortunately it's not as simple as that.At best you'd be looking at least 1% a month, and you'd need serious building experience, to get a 100% build loan.
12 month build 6 month marketing, so say 72k in interest (+), 12k + in fees + legals (X) + vals (x) + Monitoring so say 100k.
Oh and quite a bit of CGT once the houses sold (or land transferred into SPV co).
If its a big bit of land, would it be worth more with your place demolished (with the right planning in place)?
£400k is 40% of £1M - I want to secure on the house, not the land.
I'm moving into the houses so zero tax
V8RX7 said:
Deesee said:
If you have no income, get planning and sell.
At best you'd be looking at least 1% a month, and you'd need serious building experience, to get a 100% build loan.
12 month build 6 month marketing, so say 72k in interest (+), 12k + in fees + legals (X) + vals (x) + Monitoring so say 100k.
Oh and quite a bit of CGT once the houses sold (or land transferred into SPV co).
If its a big bit of land, would it be worth more with your place demolished (with the right planning in place)?
Unfortunately it's not as simple as that.At best you'd be looking at least 1% a month, and you'd need serious building experience, to get a 100% build loan.
12 month build 6 month marketing, so say 72k in interest (+), 12k + in fees + legals (X) + vals (x) + Monitoring so say 100k.
Oh and quite a bit of CGT once the houses sold (or land transferred into SPV co).
If its a big bit of land, would it be worth more with your place demolished (with the right planning in place)?
£400k is 40% of £1M - I want to secure on the house, not the land.
I'm moving into the houses so zero tax
If... you wanted to do this, separate the land/s (create 2 new titles) sell your house (tax free) and live in a van, fund the first build and see how you get on, live in it, then build the second, rinse repeat, collect the VAT.
Even a ‘Private’ investor would want 1% a Month and 50% of profit, + an affidavit from the king of Norway, and a charge over your first born
Good luck op..
I am in the middle of such an arrangement with a relative (although it was one house they were building, and have now built) rather than two. Effectively I financed them to build a smaller place in their garden so that they could then sell the main residence.
A large part of the rationale was so they could distribute proceeds of sale of main house now to various relatives, of which I am one, and potentially avoid IHT.
At the moment it isn't a particular problem but as time ticks on (their view on the value of the house and the market view diverge a little) the IHT avoidance becomes trickier. They are not paying me any interest. I'm about 18 months in. I have a legal charge over both the new house and the old house and the charge document contains a provision for interest (4% over base), I'm simply not collecting it (and won't assuming it sells soon).
The only reason I recount the tale is that I did this slightly reluctantly for a relative and I have skin in the game. I would imagine a third party would want an arm and a leg....
A large part of the rationale was so they could distribute proceeds of sale of main house now to various relatives, of which I am one, and potentially avoid IHT.
At the moment it isn't a particular problem but as time ticks on (their view on the value of the house and the market view diverge a little) the IHT avoidance becomes trickier. They are not paying me any interest. I'm about 18 months in. I have a legal charge over both the new house and the old house and the charge document contains a provision for interest (4% over base), I'm simply not collecting it (and won't assuming it sells soon).
The only reason I recount the tale is that I did this slightly reluctantly for a relative and I have skin in the game. I would imagine a third party would want an arm and a leg....
z4RRSchris said:
bridge crowd would lend on your original property if the LTV's are ok.
1%pm is pretty normal. rolled up in your case.
Ah, thanks, now I remember, Bridging Loan, that's what I looked into before.1%pm is pretty normal. rolled up in your case.
A quick google finds talk of 0.5% with my 40% LTV, £8k fees
Not perfect but far better than the previous naysayers suggested.
V8RX7 said:
z4RRSchris said:
bridge crowd would lend on your original property if the LTV's are ok.
1%pm is pretty normal. rolled up in your case.
Ah, thanks, now I remember, Bridging Loan, that's what I looked into before.1%pm is pretty normal. rolled up in your case.
A quick google finds talk of 0.5% with my 40% LTV, £8k fees
Not perfect but far better than the previous naysayers suggested.
If you do and have a low ish LTV like you say, 400k loan, then banging another £400k upto 80% wont be possible. I've seen high 60's for a second charge on bridge crowd but not much higher,
you should phase it, borrow £200k, build plot 1, sell, use proceeds for plot 2.
z4RRSchris said:
Do you have any mortgage currently? if not why dont you remortgage on a standard product and use that cash for the build.
If you do and have a low ish LTV like you say, 400k loan, then banging another £400k upto 80% wont be possible. I've seen high 60's for a second charge on bridge crowd but not much higher,
you should phase it, borrow £200k, build plot 1, sell, use proceeds for plot 2.
No, owned outright.If you do and have a low ish LTV like you say, 400k loan, then banging another £400k upto 80% wont be possible. I've seen high 60's for a second charge on bridge crowd but not much higher,
you should phase it, borrow £200k, build plot 1, sell, use proceeds for plot 2.
No income = no mortgage options (that I'm aware of)
I've spent the last 2 years building my house (and messing about with cars) asset rich, cash poor.
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