Mortgage advice to buy a property to renovate

hassleblad

I wish to buy a property from the executors of an empty house. It needs work doing on it and I have offered 100k as it stands, with some work costing 20K it will be worth approx £150k. The executors have accepted this offer.
I currently own a house worth £350k with £116K of outstanding mortgage.(Household income of £70K) My question is: How do I approach the Building society to raise the £120k. Essentially I would like a short term loan set against my mortgage for approx 6months.Would a BS look favourible on such a deal? If I take out a new mortgage there will be early settlement fees etc which I prefer not to have to pay obviously. I have an excellent credit rating with no missed payments or defaults on either mortgage or credit cards.
Advice would be most appreciated on whether this sort of additional borrowing is looked upon with suspicion especially at the moment.
many thanks

googler

If you're hoping to refurb and resell within 6 mths, you may encounter difficulties due to the money-laundering regs and the reluctance of lenders to lend to anyone buying property which hasn't been in the previous owner's title for 6 months or more.

Doozergirl

googler wrote: »

If you're hoping to refurb and resell within 6 mths, you may encounter difficulties due to the money-laundering regs and the reluctance of lenders to lend to anyone buying property which hasn't been in the previous owner's title for 6 months or more.

I don't know if I updated on my experience, but our buyers were using Woolwich I think and there wasn't a problem at all and that was turned around in just over two months from completion to completion. If there is a lot of work to do then anyone would be lucky to turn it around in that time once you've got it sorted and then on the market for any length of time.

OP I would call your existing lender as only they can tell you if your current deal carries a penalty at the moment or how much more they would be prepared to offer you.

Aftet you have spoken to them, then you should speak to a broker - see whether it is better to have a mortgage on the renovation property or your own house. I wonder how the interest payments would be calculated against tax on the profit if the borrowing isn't against the actual house?

hassleblad

Thanks for your reply, The house has been empty for 3yrs since the relative died and the executors havnt had any luck selling it as they were wanting too much and also due to the fact that there is a number of siblings involved but all have now agreed to sell to me - maybe it would be better to do the work and then let it for 12 months?
Presumably a buy to let mortgage with the money secured against my property?

Doozergirl

By the time you've done the work, and then advertised for a buyer, and then by the time they've sorted out all their conveyacing you won't be that far off six months. If they love the house then if it does become a problem they will wait until that time is up or find a lender that doesn't mind.

In our case, we'd have rented the property to the buyers until such time but it wasn't even raised as an issue, the mortgage offer came through very quickly.

hassleblad

Our current deal is a five year fixed with Nationwide which comes to an end in July - so not that far off. However the executors are keen to complete quickly and wont wait until July and obviosly Id prefer to get the job moving to catch the summer sales season.

Doozergirl

You need to speak to a broker then who can help you work out the best method of borrowing.

(Spring and early Autumn are the busiest seasons although it doesn't really matter, there's always someone looking.)