Part residential part commercial mortgage hell. Help?

Farfallina

Hi everyone. Long time reader, first time poster. I hope that someone has some good advice for us.

My husband and I had a baby recently, and want to move to somewhere larger. We have plenty of equity in our current house, have a great credit rating, plus savings. We have spotted a property we're keen on and have put an offer in. We had an agreement in principle and we were ready to go. We've hit a roadblock though.

The property we want is in a row of Victorian terraces, all residential. A few years ago, half of it was converted into offices, with a self-contained one bedroom flat in the other half. It is now being sold as one property. Our intention is to live upstairs, whilst we convert downstairs back into part of the house. There isn't any structural work, just ripping out some plasterboard etc. My husband is in the building trade, so we'd be taking care of it all ourselves. There is already planning permission on the property to convert it back to full residential use.

We've been knocked back by several mortgage companies though. They insist that they will not give us a mortgage because of its half and half nature, despite our intent to convert it into a full residential dwelling. We have a 40% deposit, but in spite of this, the property is still viewed as 'high risk'. Other houses on the road were recently sold at £60K above the price we've agreed.

I see a bridging loan as a costly and risky option. Is there any other way of doing things, or are we best placed to try to strike up some kind of deal with the vendor, that would see us do the work necessary to pass the valuation so that we can actually get a mortgage?

Kind thanks in advance.

Farfallina

Bump. Really need help guys. Thank you.

Thrugelmir

A lender that does part/part mortgages. Link below.

http://www.ecology.co.uk/html/mortgages/schemes.htm

GMS

If the property is being valued and stated as a commercial property then you will not get a residential mortgage. Valuaing the property will prove difficult as it is not what it is proposed to be.

How have you arrived at the valuation you have? Based on estimated value post conversion?

Problem is a lender will only secure on what they can see. They will not allow a post works valuation unless they imposed a full retention.

You may struggle to get a bridging loan as the valuation would not stack up. Bridging would be at around 70% of open market value.

Would the vendor not convert back to residential prior to sale meaning it may be mortgageable. How about your husband do the work and both sides have solicitors draw up a binding agreement. Issue with that is you have no guarantee of a mortgage.

Would it not be easier to look for a different property?

Farfallina

Thanks both. I'll look at both options. GMS - I wish it were easier to look for a different property. We've been looking for months. But properties this cheap in such a lovely area are harder to come by than an honest politician.