transferring/extending an offest mortgage

JacquieH_2

Following my post on 14th June re bridging loans....I've looked at them and decided not to even think about them!! What a rip-off!!
I (myself only) have a £40,000 offset mortgage...i.e interest only...with First Direct against a house worth £450,000. I want to purchase another property for me & my partner to renovate worth £175,000 but need to sell mine to purchase it. SURELY there must be a way of mortgaging to raise the money in order to secure it??
Could I change from the offset mortgage to a joint repayment mortgage and transfer it to the new property.....it is virtually needing rebuilt though!! Our joint income is only circa £37,000 but I will have capital available from the sale even after the renovation!! HELP!!

Thrugelmir

JacquieH wrote: »

I've looked at them and decided not to even think about them!! What a rip-off!!

Reflects the risk.

Despite your equity. £200k of borrowing on a £37k salary has any number of potential downsides.

hcb42

I cant see how those figures can possibly stack up, and I think I remember your original post (or it might have been someone with a similar story)...but you might need to run through it again....for clarity.

right now I am reading it that you have £40K mortgage on a property worth £450K, in otherwords £410K equity, and you want to borrow £175K of that..

that sounds difficult enough/impossible on a £37K salary...where is the money coming for the actual renovation?

One reading of it is that if you had the money to renovate this money you could recoup more than the renovation costs. But then you would need to borrow another £x of money....so your own house would be under a considerable mortgage to fund this one...and the multiples/affordability cannot stack up surely?

THe route must be: sell the £450K house, repay the mortgage leaving £410K less fees, buy the wreck at £175K do it up for X and sell for y....?

If there was a route, and you were able to borrow £175K + £renovation costs + £40K already on mortgage (interest only) it would be a major problem and would smack of lender irresponsibility - what happens if you cannot pay it back?

JacquieH_2

Thanks.....sorry I garbled it a bit!! For clarity, my house is now on the market but obviously may take time to sell. We are really just needing to get the money (or at least part of it) to purchase the other one which is coming on the market in 2 weeks time! I looked at bridging loans but they are way too risky!! We have savings too....circa £40k ! We just don't want to lose our dream property while this one sells!! I realise lenders want a longer term committment and if thats what it takes then I'm up for it!! It would be much cheaper than a bridging loan!! It just seems a shame when there is way enough equity in this house but I can't get access to it quickly! Obviously the renovation is going to come from the equity from the sale. Thanks again.

dimbo61

Worth a phone call to first direct to ask the question and see if they will lend you the money to buy the property while using the £40K in savings to pay for refurb

JacquieH_2

Thanks.....dit that and they have changed their criteria to a joint income of £50k now for offset mortgages. I was also too honest and told them I was likely going to sell the house ....which we will have to as the rebuild (and it is a total rebuild) will be in excess of £80k. Short term borrowing is becoming really expensive....even with the equity!!

Thrugelmir

[QUOTE=JacquieH;44558240_Short_term_borrowing_is_becoming_really_expensive....even_with_the_equity!![/QUOTE]

Short term borrowing has never been cheap. As whether you borrow money for 28 days or 6 months. The lender still has the same fixed overheads to pay. So needs to make a minimum profit on the transaction just to make it worthwhile.

Property is an illiquid "investment". So any ventures such as yours need to be planned on a long term basis. Not quickly cobbled together on the spur of the moment.

If renovating a property is your dream then you need to put yourselves in the position where it is possible in the first place.

getmore4less

You could make a tempting offer so they will not sell quickly to someone else.

Price yours to sell quickly.


Whats this dream realy worth to you.

JacquieH_2

Thanks all....yes, it is a dream but I don't want it to turn into a nightmare !! That said, I am starting to think I will take out a mortgage and let it run for a couple of years (Lloyds bank have offered)....paying most back but not all, when I sell the house. We have savings to cover the repayments and at the end of the day, it will probably still work out cheaper than a short term arrangement. I am pulling out all the stops to sell mine.....fingers crossed!!
Thanks again

getmore4less

A mortgage on what with what deposit?

if it is the new place thats £175k so you will need £30k-£35k of your saving and that will be a 4* multiple on a £140k and the other £40k mortgage.

have you got a lender that will lend this?

trulysaintly

JacquieH wrote: »

Following my post on 14th June re bridging loans....I've looked at them and decided not to even think about them!! What a rip-off!!
I (myself only) have a £40,000 offset mortgage...i.e interest only...with First Direct against a house worth £450,000. I want to purchase another property for me & my partner to renovate worth £175,000 but need to sell mine to purchase it. SURELY there must be a way of mortgaging to raise the money in order to secure it??
Could I change from the offset mortgage to a joint repayment mortgage and transfer it to the new property.....it is virtually needing rebuilt though!! Our joint income is only circa £37,000 but I will have capital available from the sale even after the renovation!! HELP!!

You could look at remortgaging your current property to another lender whilst capital raising the amount you need - this would be the simplest and cheapest option.

If you were looking at raising a mortgage on the new property - the problem you have is it's condition.

When a lender sends in a valuer, then they could find a multitude of issues, which could affect their lending decision.

An overall plan you could follow could be (if possible) - remortgage main residence (raising funds for purchase), then once 2nd property renovated, either sell on and repay the remortgage, or take out a new mortgage on the renovated property.

As with everything, there's more information required before anyone could comment on your individual circumstances - consult an independent adviser - it will save you time, and your sanity.