How can we buy this property - any ideas?

MarktheHarp

Hi all,

I've found a property I would really love to buy. It's been repossessed and is in need of quite a bit of renovation, but it's something we'd love to do and hopefully enjoy it for years to come.

Our own house has been on the market a while and we have just today reduced the price hopefully to sell very soon - there's plenty of interest but our agent feels we would attract a whole new set of potential buyers with this reduced and much more realistic price.

To buy a repossessed property I would have to be able to offer a guaranteed sum and if the purchase went ahead we would have to be able to start doing some work on it before we move in, which means having to buy the new one before selling the old one.

On the face of it we are in quite a good position - we have somewhere local to the new property where we can live for a few months if need be, and have practically no mortgage outstanding on our old property. But without a guaranteed sale on our current property it's quite difficult to get this situation moving and I was hoping someone here has some ideas. Here are my figures:

• We believe we can realise £420-430k on our present property
• We want to be able to offer up to £320k on the repossessed property but also have to have a 10% deposit
• We have savings of about £70k which we could access reasonably quickly - some of this of course being required for the deposit.
• The work required to make the repossessed property habitable is £120k but can be paid as and when completed.
• Our current outstanding mortgage on the house we live in is for £37000 which is interest-only and should be paid off when the endowment matures next year.
• Our income is not huge - £18k from a pension and between £6-£10k a year from other business activity, including an online business which we've run for 9 years.

We are happy to gradually work on the new house once we're in there, but we do need to pay a builder to do at least £45000 work on it (reroofing) before we can think about moving in. We can't extend our current mortgage (with the Abbey) to buy the new house, as the lender "won't do bridging finance" and that's effectively what we would be doing - although they would be happy to extend the mortgage to purchase most other things.

Any thoughts - or should we just give up on our dream??!

keith969

Your basic problem is that you'd need a mortgage or a bridging loan to buy the place before you sold your house. You'll not get a mortgage because your LTV is too high and your income too low. A bridging loan would be costly and very risky if your property did not sell fast enough.

lincroft1710

You're either going to have to sell yours first or find someone who will lend you either £290K app or £320K app (depending on if you use savings for deposit) for a short term. Unless you're very persuasive, because of your income, I can't see you getting loan.

Let us say you get £400K for present home, less £37K outstanding (which endowment may/may not pay off) plus £70K savings less £10K moving costs/fees etc = £423K, £460K if your mortgage gets paid off. Other house could be £450K when finished (allowing for contingencies).

If you can get the short term loan, it is feasible, but your savings will be depleted, or you may have to have small loan, if endowment fails.

I cannot advise you what you should do. If you definitely want to go ahead then you should really sell existing home first.

Fire_Fox

Drop the price on your current house for a quick sale and move into rented accommodation whilst some of the building works are completed on the new house.

soulsaver

Drop the price on your current house for a quick sale and move into rented accommodation whilst some of the building works are completed on the new house.

Sounds like an option but risky & stressful as not guaranteed to get the repo at the indicated price; agent is bound by law to keep taking offers from other parties up to exchange to minimise residual impact on disposessed owner.

MarktheHarp

Thanks for all the useful replies so far. We're talking to some financial people tomorrow to see what's possible (if anything).

It's actually quite a large property which is extremely solidly constructed, but roof damage (not visible outside) has caused a lot of dampness and rot to some internal joists. However, it's a potentially amazing family house, so thanks for the ideas - any more please lob them in!!

PS have also investigated letting out my own property but that would realise £1500/month, which would still not be enough to raise a mortgage on the "new" property we are after.