need to buy but only briefly

ollski

We have been living in our current house rented off our landlady (a relative) for seven years. The value currently is 140k but we have been offered a quick sale for 100k. I can lay my hands on 10k quickly to make the deposit meaning I need a mortgage of 90%. We aim to tidy the house up for resale in about 10 weeks and during this time we'll be in a rented property elsewhere. Do we need a special mortgage for this?

Thrugelmir

People don't give away £40k without good reason.

McKneff

If youve been there for 7 years why dont you want to live there now. Its your home.
Why cant you live in the house while your tidying it up.

If your just in it to make a fast buck dont you think its going to be a slap in the face for your relative when they have been so kind to yu.
They could just as easily given you notice to quit and sold the house elswhere for its full value.

I think you need more than a 10% deposit nowadays, cant help with the mortgage bit, sorry.

GMS

You are assuming it will value at 140k. May or may not.

As you are buying from a relative and as a sitting tenant you may not need a deposit.

ollski

Thrugelmir wrote: »

People don't give away £40k without good reason.

No, I presume she has a good reason...like a quick sale to fund some other project. Not really interested.

I don't think it will be a slap in the face, we paid 20k to make the house habitable 7 years ago and rent of about 80% market value ever since. She knows the place needs 20k of work to make in rentable and doesn't want the work as she lives abroad. We were about to look for a place at around 250k to buy very soon and this has come up as an opportunity for us to do a few weeks of hard work and get a better deposit for a cheaper mortgage rate on our next house.

The estate agents put a value of 135 - 150k but I appreciate we will be toward the lower end to get a quick sale.

somethingcorporate

I am sure there is a clause somewhere that I recall about the purchasers mortgage that the owner needs to have owned the house for more that 6 months.

This may mean that you may end up limiting who you can sell to or may have to plan to own it a little longer than your ten week project plan.

I am a bit sleepy so this may or may not be right.

haras_nosirrah

The only problem I can see is that you may not be able to get a mortgage buyer on it when you sell if you have to sell on that quickly. Most companies want the property to be owned for more than 6 months by you before they will grant a mortgage for your buyer.

The valuer for your buyer would also look at the recently sold prices when valuing for your buyer and would see what you bought it for so you may not get what you want for it when you sell.

You would also need a mortgage without any early repayment charges otherwise they would get thousands from you there too when you sell (by redeeming the mortgage within its initial tied in period they can charge up to 5% of your outstanding mortgage as a penalty)

Lots of things to consider.

hcb42

some lenders will not lend if the house is going to be put up for sale imminently, including the big bank with black logo who are hoovering up a lot of fixed rates and offsets at moment

orangina

You may be able to use the "gifted deposit" from your relative as part or all of your deposit. Depending on how the house values - be conservative.

Any bank will not be keen on offering you a residential mortgage if you state that you are going to be selling it on as soon as possible as they do not make profit this way. Also if yoou are not going to be living there then it is not a residential purchase...you also need to consider the property insurance as it cant be residential buildings insurance if the property is left empty for more than 30 days.

Your options are -

1 - Live in the property whilst you do it up and dont tell the bank you plan to sell asap (as this may not materialise anyway and you always have the right to change your mind) and take a mortgage without ANY redemption penalties ( these will have high arrangement fees ) - this will enable you to potentially use the gifted deposit, secure a residential mortgage and residential B&C insurance.

2 - Apply for a Development Mortgage (where the bank knows the property is being renovated for sale and you are not living there) - however you will not be able to use the gifted deposit and will need 25% minimum deposit and the interest rate and fees will be considerably larger - you will also need to find the extra 15% quickly to take advantage of the quick sale you are being offered

Good Luck

orangina

Also, the only issue you will have with a quick sale is if you are registered at the land registry as the new owners, this can take time so make siure your solicitor sends off that paperwork asap after you buy - lenders for the new purchasers dont care how long you have owned it, the 6 months talked about relates to new build propeties

getmore4less

Why not stick it on at offers over £100k and just get what you can, no work no risk. Sell it on for the relative.

If you need to throw £20k into the place to fix it up where is that money coming from.

£20k 7 years ago and another £20k now what can need doing that costs that much?

Don't forget if you don't live there potentialy say good by to some of the profit in CGT allthough 2 allowances should cover most/all of it.