Mortgages for old house requiring complete renovation

Ab1ga1l

Hello,

My brother is looking at purchasing an old house in 12 acres of land.
The house is stone built and requires complete renovation.

In this situation, where the current house has very little value (but will obviously gain value when renovated), does a mortgage company only lend based upon the value of the land? e.g £8k per acre etc?

He's hoping to take out a mortgage to cover the cost to buy the property but also to cover som eof the renovation costs (they are high!).

Just wondering if any of you financially savvy people would have any advice here?

Many thanks

CloudCuckooLand

If uninhabitable he won't get a mortgage, other than through a specialist/development product, I suspect.

If it is habitable, he would need at least 10% deposit, getting a 90% mortgage - he cannot borrow more than its current value - leaving no funds for the redevelopment.

tyllwyd

For a standard mortgage I think the house would need to have a working kitchen and bathroom.

He probably needs a mortgage for self-builders.

Werdnal

When we bought our current home in 1993 (things might have changed since then), it was habitable, but only just! We already had a mortgage on the property we were moving from, which we wanted to increase slightly and the lender reviewed the value of the "new" house, We were then told they would keep a retention which we could draw down as the work was done. They would need to inspect the work in stages and pay out according to the increased value, thus funding the next stage of the work. As it was, we managed to scrimp and save and do it all without the money they kept back, so reduced our borrowings in the long run.

sham63

Have a look at the Buildstore website, they can provide finance for this kind of project;

http://www.buildstore.co.uk/finance/index.html

kingstreet

Might be worth an early check for agricultural restrictions, based on the description.

Ab1ga1l

Thank you all for your helpful messages x

Ab1ga1l

Hello Kingstreet,

The estate agent doesn't have this information.
What would you suggest as the best method for checking for agricultural ties?
Would this be detailed in the Land Registry documentation?
Or would it be best identified by a Solicitor?

Many thanks.

kingstreet

Ab1ga1l wrote: »

Hello Kingstreet,

The estate agent doesn't have this information.
What would you suggest as the best method for checking for agricultural ties?
Would this be detailed in the Land Registry documentation?
Or would it be best identified by a Solicitor?

Many thanks.

Should be revealed to purchaser's solicitor at pre-contract or enquiries stage, not sure which. I'd ask the agent to contact the vendor's solicitor for the information, if you want to find out before you spend any money.