Mortgage / Situational advice.

Bunnywun

I am currently unemployed and living off of savings with my girlfriend at her property.

I have my own house, but I'm ashamed to say, I've let it fall into a state of disrepair over the years..........I shudder when thinking of lost rental income over the years!

The value of my house (assuming it was refurbished) would be in the region of £140-£150K and my mortgage is about 20K.

I currently have a builder sorting out a garden fence issue and I'm considering asking him if he would be interested in the rennovation of my house............However, I have dwindling funds.........I am going to see if I can re-mortgage for a few thousand more in order to finance this. I am assuming that, because of the large amount of equity I have in the house, a lender would not have too much of a problem with the fact that I'm currently unemployed.

I think it would only take a matter of weeks to complete the work and then I would be in a position to either sell or rent the property for somewhere in the region of £500 per week.

Does this seem like a sensible, do-able plan, or have any of you MoneySaving experts out there any alternatives for me to consider?

Many thanks,

Lawrence.

beecher2

I'm afraid your assumption is incorrect - you won't get a mortgage while unemployed. You need to reconsider your plans.

Peter_L

Unfortunately, regardless of 'perceived equity' (a house is only worth as much as someone is willing to pay for it) you will not get a mortgage in your financial position ... sorry, your only route will be to ask friends/relatives to loan you the amount to do it up before you can sell. The other thing to think about is that house prices have plummeted and buyers are finding it hard to get mortgages so may take some time to sell ...

Other thing to consider though is selling it without doing anything - at a reduced price of course ...

CLAPTON

are you claiming JSA?

if you are unemployed cna't you do some of the work on the house and garden

Bunnywun

I would do some of the work myself. Sorting out the garden etc and painting for instance. I'll be assisting the builder with the repair to my garden fence. The physical effort is not a problem and I do have some ability in the DIY dept, but I absolutely hate doing it and I know from experience, that things would not move forward doing the work on my own. Selling might not be easy in the current economic climate, but I'm sure it wouldn't take too long to get the house rented, once it's sorted out and £500 a month would be quite useful!

mascott514

Just an idea...

If you are thinking of selling, you might be able to agree to the builder taking his share on completion of sale. You might make more, but he would want more.

It might be worth talking to him if its a builder you know and trust. (even so you would need a contract)

This is what we did with my Nan's old house and it worked out great. We made more on the house than selling it unrefurbished, and the builder was paid substantially more than a standard cash only job.

As I say, you need to know the builder though, this was one we have used for 10 years, and trusted!

getmore4less

Why can't you rent it out now?

Burridge60

getmore4less wrote: »

Why can't you rent it out now?

I think he said it was the state of the property that prevented this.

There are BTL mortgages that allow you to refurb and then rent out but they require employment/self employment and aren't cheap by comparison to a residential mortgage that you have now.

Can it not be made adequately habitable and if redecoration is the issue a Tenant could do this for you in lieu of some of the rent. You would need to be confident about their DIY abilities and their colour tastes.

Don't forget to get your lenders permission to rent the property out.