Investment opportunity that the banks won't touch

timmo81

My step uncle sadly passed away earlier this year. Before he died, he was renovating a workshop in Wales with his father (my step grand father) who passed two years before him.

Due to certain details in his will my step grandfather made contingencies for my uncle in his will. Long story short instead of the property staying in the family, three extremely distant cousins are the benificiaries.

Through probate an offer of £42,500 has been accepted.
Valuations from estate agents have come out at £60-79,000.
As a family project we have been trying to secure a mortgage for £56,000.
Once developed the property would realistically fetch 100,000 plus

Now as first time buyers me and my brother have found that as your first mortgage valuation is 100% of the mortgage this has become an impossibility as the £56,000 works out to a 130% mortgage. We should be able to muster up the deposits.

The thing is that we are actually asking for on average 50% less than most folks going for a mortgage but this isn't taken into consideration. We've spoken to the banks about bridging loans and development loans but to no avail.

We are looking to develop it and finish the job that our uncle and grandfather started but don't seem to be able to.

Does anyone have any suggestions on how we could secure funding?

All help appreciated

googler

Look elsewhere for funding (away from the banks).

Local businessmen? Other businessmen (or women)?

A google for 'business venture funding' , 'startup capital' or similar terms may find something useful.

silvercar

Can you borrow elsewhere to get the funding? Mortgage on your homes, credit card loans.

You could try zopla.com or firstfunding.org.

GDB2222

If you're paying 42k, why do you need a 56k mortgage?

Doozergirl

GDB2222 wrote: »

If you're paying 42k, why do you need a 56k mortgage?

I think that's a very important question. Is it to finish the work?

If it is then rather than seeking a 130% mortgage (which there is no getting around if the purchase price is £42k) it sounds like you need to look for business funding to buy and complete the development. Put together a business case for the development and present it that way.

Euphoria1z

go to a bridging loan company, an independant one, theres plenty of them, thou they do charge a fair bit whilst the amount is outstanding ( a % of the borrowed amount), so its a short term solution. just google it (the money centre do bridging loans also) and then remortage to a normal lender once the works finished.

mlz1413

How long do you consider it will take to finish and when done do you intend to keep or to sell?

How much is the gap between what you can raise and what you need? I'm assuming a mortgage will not lend the £42000 on a unfinished workshop and that you also need £14000 to finish it.

Although this project may have an emotional attachment I would take a really hard look at if it is viable. Someone else may have the cash to buy it out right and then be able to do it up and surely seeing it finished would be better than breaking yourselves financially and like your grand-dad and uncle still not finishing it.

timmo81

How long do you consider it will take to finish and when done do you intend to keep or to sell?

We’re looking at 3 to 6 months and intend to sell it.

How much is the gap between what you can raise and what you need? I'm assuming a mortgage will not lend the £42000 on a unfinished workshop and that you also need £14000 to finish it.

Workshop is a little misleading as it is essentially a cottage, open plan upstairs and kitchen bathroom and space downstairs.

Although this project may have an emotional attachment I would take a really hard look at if it is viable. Someone else may have the cash to buy it out right and then be able to do it up and surely seeing it finished would be better than breaking yourselves financially and like your grand-dad and uncle still not finishing it.

To be honest after my Granddad died we’re thinking my uncle lost all hope and suffered quite a bit of OCD. Its less of an emotional attachment and more of an opportunity to pick up a property at below market value, develop and sell on a reasonably unique property in a sought after welsh village outside Penmanmawr(sp;P) that hasn’t really seen demand drop during the housing crash.

If you're paying 42k, why do you need a 56k mortgage?
I think that's a very important question. Is it to finish the work?

Essentially yes it is in need of a few walls knocking down, new kitchen, new bathroom, new heating installed. Its smaller and more unique than developing a normal two bedroom house and feels like a good property to maybe look into developing as a first project.

If it is then rather than seeking a 130% mortgage (which there is no getting around if the purchase price is £42k) it sounds like you need to look for business funding to buy and complete the development. Put together a business case for the development and present it that way.

Will look into this.

Can you borrow elsewhere to get the funding? Mortgage on your homes, credit card loans.


Our grandmother may be able to fund the deposit but we don’t have any homes to remortgage.

Cheers folks, My brother and my combined earnings are £43,000 which I didn’t mention before. It just seems that even though its an 130% mortgage its still 45% cheaper than your average first home and the test seems to be mounted against our favour. We’re looking into joint financing with our Mother and Grandmother as Guarantor and Depositor. Will look into the moneycentre and zopli stuff to see whether its viable.

Fire_Fox

Does this workshop actually have planning permission to be used as a dwelling? Are you experienced in property development or have building skills (not DIY)?

Trollfever

Put it up for auction and let somebody else take the risk/profit.

timmo81

Im confusing people it is a dwelling. My uncle lived in it, its a converted workshop. There are some jobs that will be done professionally others that my family have experience in (tiling etc). But to be honest £14,000 should be enough to get Pro's in to do most of it.