Mortgages, buying, selling = baffled

hd7481

We are planning on viewing a property next week that is £70k (needs complete renovation). My husband is employed (earns £17k) and really wants to become a property developer and this would be our first step onto this ladder. I am a student until August 07 when i hope to enter full time employment. Our current house has a mortgage of £51k and we would hope to sell for £90k (possibly more). We want to use the money we make from our current house to renovate the next property which is a house with planning permission to be made into 2 flats. Of course we have debt, 2 loans on the go and about £4k on credit cards. As my husband is the sole earner i need to know if there is any point even going to look at this house next week or we should knock our ideas on the head.

UK007BullDog

You could buy the property as a BTL.

However if you cannot rent it out as it is uninhabitable you will have a problem as you would need to support your mortgage, your two loans, your credit cards and you still have all the other costs to look at and still have to eat and live AND pay the new mortgage.

Do you have a deposit? For a BTL or property development you would need at least 15% deposit to get a good rate. BTL mortgages are more expensive with associated high fees. Also the rental income of the property would need to cover the interest payments by up to 135% (depending on lender, deposit etc.)

You did not say how much your loans are and how long they are still going to run. I don't think it would be possible for you, however once you work it might be a possibility. The only way to know 100% is to go see a whole of market broker who will look at your budget and the amount of deposit you can put down.

hd7481

We have a loan of £13k and one of £6k which have 3 years and 2 years to go.

We hope to make £45k profit from the sale of our house that we would use for deposit/development. However we know of an exact same house in a neighbouring village which achieved £15k on the open market which was in a bit of a state. So we are probably underestimating a fair amount.
We also thought the logical way to go about things would be to spend our development money on one of the flats, to complete it and sell it, as we can move onto the second project and then sell this. We are not new to upgrading and modernisation, so spend is hopefully going to be on materials only.

Forgot to mention that as it is a development i would consider an interest only mortgage.