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  • FIRST POST
    • Pete Rose
    • By Pete Rose 15th Oct 16, 2:07 PM
    • 8Posts
    • 0Thanks
    Pete Rose
    Mortgage for a derelict property or renovation project
    • #1
    • 15th Oct 16, 2:07 PM
    Mortgage for a derelict property or renovation project 15th Oct 16 at 2:07 PM
    Hi,

    I'm new here and I'm posting as I have a goal I'm trying to acheive.
    I'm a Gas Safe registered plumbing & heating engineer with some experience in all other aspects of the building trade.
    I want to start buying, renovating and selling houses that are either derelict or need substantial renovation work carrying out, preferably period properties. My partner and I have £70,000 of equity in our current home which we would be happy to sell in order to finance some of any given project.
    My questions are;
    1. Can anyone advise on who I should approach with regards to a mortgage/bridging loan.
    2. As this would be my full time job, what would be the best way to ensure I can pay the bills and put food on the table for my kids and partner?

    Any advice would be greatly appreciated!
Page 1
    • Thrugelmir
    • By Thrugelmir 15th Oct 16, 2:33 PM
    • 51,268 Posts
    • 43,067 Thanks
    Thrugelmir
    • #2
    • 15th Oct 16, 2:33 PM
    • #2
    • 15th Oct 16, 2:33 PM
    With regards to a mortgage the property needs to be habitable. Other types of funding are a different matter and would require a visit to the small business unit of a bank or other specialist lender.

    With no income from employment or history of a similar line of business. Funding maybe problematic.
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
    • Smodlet
    • By Smodlet 15th Oct 16, 2:59 PM
    • 1,793 Posts
    • 2,983 Thanks
    Smodlet
    • #3
    • 15th Oct 16, 2:59 PM
    • #3
    • 15th Oct 16, 2:59 PM
    Hello and welcome. Your ambitions are admirable, and it sounds as if you have a great set of skills, but you need to be aware that any property without either a usable kitchen or bathroom is seldom mortgageable. They also need to be safe to live in. No-one will lend on a property that is not so without serious reductions in the amount they will lend and conditions which have to be met, e.g. "Fix the roof/stairs/floor/whatever". You need to be a cash buyer/have alternative funding if you are going to be a property developer.

    You must know people with skills complementary to yours, electricians/plasterers/plumbers perhaps? Have you thought of approaching some of them, ideally trusted friends, with your ideas? You might find someone who has some capital and is interested in going into some kind of partnership. You will not know until you try.

    I would advise against giving up the day job until you are in a position to fund at least one project at a time without borrowing. People do do this as a side-job on evenings/week ends... Would your partner be willing to accept never seeing you for a while? As you said, you need to take care of your family but, with the right backing/partners, the world could be your oyster.

    Good luck and HTH.
    What is this life, if, sweet wordsmith, we have no time to take the pith?

    Every stew starts with the first onion.

    I took it upon myself to investigate a trifle; it had custard, jelly, soggy sponge things...
    • peter we
    • By peter we 15th Oct 16, 9:26 PM
    • 73 Posts
    • 57 Thanks
    peter we
    • #4
    • 15th Oct 16, 9:26 PM
    • #4
    • 15th Oct 16, 9:26 PM
    Bridge/Alternative Lenders will lend against land/property including your current home.

    http://www.theastl.org/ASTL-Website/members-directors.html

    You need to a detailed project plan with costs, projected profit and exit.
    • ACG
    • By ACG 15th Oct 16, 9:41 PM
    • 13,492 Posts
    • 6,637 Thanks
    ACG
    • #5
    • 15th Oct 16, 9:41 PM
    • #5
    • 15th Oct 16, 9:41 PM
    Ive bought, done up and sold a couple of properties.

    If you plan on living in the property whilst doing the work, assuming it is classed as habitable (hot running water, bathroom, kitchen, electricity, doors and windows) you can get a normal mortgage subject to valuation.

    If any of those are missing or you do not plan on living in the porperty then you are probably going to need something like a bridging loan. Bridging loans are more expensive, but they do give you the opportunity to either pay interest only or allow the interest to roll up.

    Probably best speaking to a broker to discuss more about your plans and the properties in order to find out the best options to finance them.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • Pete Rose
    • By Pete Rose 17th Oct 16, 11:58 AM
    • 8 Posts
    • 0 Thanks
    Pete Rose
    • #6
    • 17th Oct 16, 11:58 AM
    • #6
    • 17th Oct 16, 11:58 AM
    Thanks for your reply Thrugelmir. One option I was looking at was working 3 days a week for a company and the rest of my time on the renovation project.

    Do you have any advice on the kind of lender/loan I should be looking for? I've heard people mention bridging loans, not quite sure how they work though....
    • Pete Rose
    • By Pete Rose 17th Oct 16, 12:16 PM
    • 8 Posts
    • 0 Thanks
    Pete Rose
    • #7
    • 17th Oct 16, 12:16 PM
    • #7
    • 17th Oct 16, 12:16 PM
    Thank you for your reply Smodlet.

    I am a plumbing and heating engineer so the installation of both kitchens and bathrooms as well as the installation of heating/hot water are second nature to me. I also have experience of house rewiring and roofing so neither really phase me. But yes, I know several electricians, plasterers, tilers, chippies etc.
    Being in a position to fund a project in its entirety myself isn't really an option as house prices (even wrecks!) are way above what I can save within a reasonable timescale. It was advice on loans etc. that I was really after.

    Thanks again.
    • Pete Rose
    • By Pete Rose 17th Oct 16, 12:18 PM
    • 8 Posts
    • 0 Thanks
    Pete Rose
    • #8
    • 17th Oct 16, 12:18 PM
    • #8
    • 17th Oct 16, 12:18 PM
    Thanks for your reply Peter we. I will look at your link and carry out further research into what is required.
    • Pete Rose
    • By Pete Rose 17th Oct 16, 12:22 PM
    • 8 Posts
    • 0 Thanks
    Pete Rose
    • #9
    • 17th Oct 16, 12:22 PM
    • #9
    • 17th Oct 16, 12:22 PM
    Thank you for your reply ACG.

    Yes, we were thinking of selling the house we're in, moving either into the renovation project if habitable, or into a static caravan on site while we carry out the basic work necessary to move in. I will take your advice and speak to a broker.

    Thanks again.
    Last edited by Pete Rose; 17-10-2016 at 4:28 PM.
    • Brock_and_Roll
    • By Brock_and_Roll 17th Oct 16, 12:49 PM
    • 697 Posts
    • 659 Thanks
    Brock_and_Roll
    I know a guy who has been very successful doing this - he has all the necessary skills, but not the money.


    As bank funding is unlikely, he has a wealthy private investor - who has the money but not the skills & time. They split the profits.


    Together they have done very well over recent years as they can offer cash on the nail for properties which obviously gives them an advantage.
    • sivs
    • By sivs 17th Oct 16, 1:04 PM
    • 197 Posts
    • 41 Thanks
    sivs
    Will you be willing to pay the additional stamp duty as you will already be a homeowner or have I missed something?

    Sorry I did not see the post where you say you are selling your house. If you don't sell then additional stamp duty will apply.
    • Pete Rose
    • By Pete Rose 17th Oct 16, 4:20 PM
    • 8 Posts
    • 0 Thanks
    Pete Rose
    Hi Brock_and_Roll,

    A private investor would be good, but I don't know any!
    • Pete Rose
    • By Pete Rose 17th Oct 16, 4:20 PM
    • 8 Posts
    • 0 Thanks
    Pete Rose
    Hi Sivs,

    Yes, we would sell the house we're in.
    • maninthestreet
    • By maninthestreet 17th Oct 16, 9:47 PM
    • 14,889 Posts
    • 13,133 Thanks
    maninthestreet
    Hi Sivs,

    Yes, we would sell the house we're in.
    Originally posted by Pete Rose
    How much equity do you have in the property you are currently living in??
    "You were only supposed to blow the bl**dy doors off!!"
    • Pete Rose
    • By Pete Rose 18th Oct 16, 9:21 PM
    • 8 Posts
    • 0 Thanks
    Pete Rose
    Hi Maninthestreet,
    Not a lot - £70,000
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