Further Advance - Loan required- help?

AJAX123_2

Hi,

We purchased a property 4 months ago for 867K, taking out a mortgage for 550K and holding back an addtional amount of 150K of cash for the rennovations. We received planning approvals and put the work out to tender but it has become apparent that this is going to cost more than we first thought. We are short of approx 70K to do the complete rennovations which should take the property to £1.8m according to local estate agents. NB: also according to the same agents the property is currently valued at £1 m with the planning approvals and building regulations and raised property prices for this area as it stands.
We have approached our current lender but they will not lend any more money based on incomes, we have also looked at secured loans and have also come up against a brick wall because of earning even though we know we can afford the repayments on the further borrowing and that we are putting in a further 150K of our own cash.
The dilemma here is: if we use the £150k to do what we can and bring it to the stage of renovation per this amount it will still bring the property price up yes but it does not do the full job and it does not reach its full investment potential.
Can anyone out there suggest a lender that will take into account the massive equity involved here and see that the risk is not so high given the amount we are putting in this. We were rather hoping that our current lenders would have been more understanding. Thanks for any help.

Conrad

Assuming the current value of £1m is correct, there are some small private lenders that might be interested. They tend not to go above 65%. These offer short term finance at high rates (as they have to make thier money quickly as clients repay such loans within a year). Typical rate would be something like 18%.

Payments can usualy be rolled up and made at loan termination. Lenders will need a clear exit route and wont lend where a protracted endeavour is expected.

I cant band about names as these are small private lenders that need clients pre - vetted. Find an experiened broker.

AJAX123_2

this would probably be an ok option of was rennovating to resell. However, this is not the case and we currently have a 2 years fixed in deal at 3.99% A L. Is there anyone else out there that can suggest a less costly option?

VIGILANT22

If the lender feels you dont have the income to support the lending...you won't be able to borrow....no self cert mortgages anymore........

AJAX123_2

yes it seems so.........but the lender does not even want to go into the finer detail, even though they do currently have a stake in the property. This is so unfair given the potential equity here and the fact that they have put us in this very precarious situation in the first place. We would not have ventured down this road if we had known they would bail out before completing! Thanks anyway.

VIGILANT22

The lender owns 63% of the property...I guess they don't want to risk
anymore...

I am not sure what you mean by this "the fact that they have put us in this very precarious situation in the first place".....?????

AJAX123_2

The property is actually currently valued at between £1m to £1.1m this gives the lender a 50% share with 50% risk! We are putting in a further £150,000 cash with less risk to the lender.
We are asking for only a further £70K at a decent rate to complete this property with a value potential within the next 6 months of £1.8 according to the estate agents and we are talking Surrey. The LTV ratio will significantly change and we are asking for their support with this given that we entrusted our lending to them. We are low risk we have never faulted on a payment and have never owed masses on credit cards our finances have always been 100% healthy. They have put in lending restrictions based upon people that have not been so sensible with their finances we are not those people!
Precarious because they knew all of this when we applied for the mortgage. We were told that the likelihood of being able borrow a little more to complete would be looked upon favourably because of the amount of work completed and time having moved on.
We shall obviously have to look at an alternative option to make this happen.

VIGILANT22

what is yr income?

Conrad

AJAX123 wrote: »

We are asking for only a further £70K at a decent rate to complete this property with a value potential within the next 6 months of £1.8 according to the estate agents and we are talking Surrey.

The high charging lenders would likely lend £70k at say 17% rate (for example). So if you borrowed that sum for 12 months the interest due would be £12600. They will charge around £4k in fees, so that's £17k rounded.

You say you will make a substantial profit, so I do not see how £17k would be unreasonable.

AJAX123_2

Thanks for your suggestion not prepared to pay such a high rate of interest just not worth it! We have other options i.e knocking down the house and rebuilding so shall now look into that route.........Its a journey, thought we were at the end, it appear not.....thanks anyway

SandC

AJAX123 wrote: »

yes it seems so.........but the lender does not even want to go into the finer detail, even though they do currently have a stake in the property. This is so unfair given the potential equity here and the fact that they have put us in this very precarious situation in the first place. We would not have ventured down this road if we had known they would bail out before completing! Thanks anyway.

You were the ones who got the sums wrong for the renovations, not the lender!