Develop basement into new flat - where to start

snomys

I am a homeowner, own the ground floor flat of a Victorian conversion.

For several years, Ive looked at the equity in my place and thought about renovating the basement under the property into a new self contained flat, to then sell.

Living in London, after all there is a shortage of proerties right?

Essentially I know a little bit of the process what to do etc, and I imagine it goes something like this.

Get survey's, planning permission, dig out and underpin, install homely interior, sell.

However, one thing here is missing, where is the best place for me to get the loan for doing this. And what type of loan would be available?

My place is currently valued at +200k, and I ahve a outstanding mortgage of 70k, should I borrown against my home?

My guess is developing the basement may be 150k ish, and the sale of a 1-2 bed flat may generate 220k, this is a great incentive for me to turn the space below me into finance.

A few things obviously play on my mind.

1. Ive never done anything like this before.
2. Im worried about builders taking longer than necessary and budget overunning.
3. Im worried that borrowing against my own home, will mean a gamble I could lose and thus end up homeless!

Any advice greatly welcome? Should I stick or twist? And is now a good time to twist?.... or stick????

ddraig1

Hi I cannot advise you on who to go to for a loan (although a remortgage and changing it to interst only might be good if you intend to use the money after the sale to pay off the mortgage,just make sure that you get one with no penalties for early repayment), or whether its the right time to do it.
You say your worried that the gamble might not pay off, personally I would start looking at this from a business point of view and take the idea of a 'gamble' out of the equation.
First thing i would do is check with estate agents to get a good idea on the going price for basement flats, who buys them (so your decor can appeal to them) and whether they sell quickly or will it sit on the market for 6 mths etc.
Secondly check your deeds to make sure that theres no covenents saying you cannot develop the basement and sell it on etc (rare I know but its better to be safe then sorry) also check whether your mortgage company will allow you do do it as they might say no as it will possibly lessen the value of your current house.

If after all the preliminary investigations are completed and it is a viable proposition, then make sure you tie down the builders to a tight contract, making sure that they will have penalties if they dont complete on time, or if the final finish is not up to standard.

All I can say is do your homework and leave nothing to chance. Work to a strict budget and if your not sure how to design the interior to look the part, spend a little extra and employ an interior designer who has experience.

ILW

If the flat is leasehold, there is a high probability that you do not have any rights over the basement. You need to check carefully.

snomys

Currently in the process of obtaining the freehold jointly with my neighbours, as we have an absentee landlord. This is taking a considerable amount of time though to be fair.

Thanks for your advice, its greatly appreciated.

bryanb

snomys wrote: »

Currently in the process of obtaining the freehold jointly with my neighbours, as we have an absentee landlord. This is taking a considerable amount of time though to be fair.

Thanks for your advice, its greatly appreciated.

Presumably then you and neighbour will jointly be developing?