Finance Property Without Mortgage ?

izzzzythedog

A property has become available , its industrial with living accommodation , the price is approx 50 grand , i intend to purchase this property and after a degree of renovation move in and operate my own business from there

my sit is i own my own home and im presently paying twice the mortgage as i intend to pay it off early , my income isnt easy to show as i work part time with my father , its complicated so not easy to show what i receive , its not a great income , the wife works and the mortgage is low , my intention would be to reduce the overpayment of the house mortgage which would help towards paying for the new property , once the new property is up and running we would move in and privately let our house , i should then be able to pay off 3 times the mortgage every month and have it payed for in 4 yrs or less , as i would be starting out on my own i would have even more income which would also go towards paying for all this

i have some savings to the tune of approx 20 thou , i owe nothing anywhere

i intend to finance the property my loans credit card or loans from family/friends , i have vrs credit cards with amounts avaiable from 3-6 thou , the interest rate will be horrific at first and i would intend to pay these off asap , i had and i guess could activate a flexi loan ( hsbc ) which would also give another 6 thou , i think i can just about manage to get the ££ together but it wont be easy and the time frame isnt great


i cant start off the new venture without a property and hence cant show a projection of income ( 25 thou before so approx 17 thou for tax )

i think a mortgage adviser would be a reasonable idea but due to the nature of my income ( cash with only stamp and mortgage payments to show income apart from the wifes which is bacs ) id guess i would be shown the door as a reprobate

can anyone advise a better way of doing this rather than how i have shown ?

holly_hobby

This is a primarily a commerical premisis (which you have stated you will continue to use as a commercial purposes ), and IMHO you will need a commerical loan.

A mortgage adviser can generally only get you a mortgage on your taxable income - if you are an PAYE employee as you indicate, there should be absolutely no reason why you can't prove your total income to a lender. (unless of course its no all being declared to HMRC - which is how it sounds).

Further to which you are looking commerical finance - which as a max LTV of 70% at best.

The only option I can give (as oppossed to maxing out every avenue of credit you have open to you) is to seek to persuade a commercial lender to have a charge for the commerical lending placed on your residential home (subject to sufficient equity, and the agreement of the 1st charge mge lender).

A lender will also probably want a business plan, as you say you are purchasing the prems to facilitate a new venture - whereby one assumes you will be leaving the current employment of your family ,and the regular income derived from this arrangement (although you say your income "is not great" and is "complicated and difficult to prove", you have managed to save 20k and currently pay double your scheduled mge payment each month).

You need in my opinion, a commercial broker, who will be able to assess just from the figs and details you present, if its even worth applying before completing any forms or having any bank interviews.

Its going to be v difficult with your current finances - you work for your family, would they be prepared to advance you the monies as business loan/venture capital form their company, with an legal formatted arrangement for you to repay it ?

Other than the above .... I am afraid I am stumped .... others will be along with hopefully another possible way to acheive your requirements (but I have to be honest ... its tricky)

Hope this helps

Holly

getmore4less

What income can you prove between you and what is the value and mortgage on the current house.

What will it rent for

izzzzythedog

thanks holly

for clarity

im a wedding driver , as you can imagine most people get married on saturdays only but i dont work every weekend , tax is paid as its my fathers business and i recieve a wage which is declared , its very very part time so i have maybe less than 5 thou a year , the cash i have is the product of a divorce , i part financed the property i live in plus paid some into a high interest account as a rainy day fund , i have also brought gold for a while now buying sovereigns so have a fair few thousand pounds worth , i mainly brought at between £130 and £150 , the present price is £280 or so , the mortgage on this house is less than 200 a month as we brought the cheapist house in the village and living up north helps , we dont drink or smoke , the wife works in the village , i have solar panels up and the house is council tax band B , in other words we live a frugal life , we dont even pay for commuting , i like to think we have been sensible and careful over the years

i intend to go back to being a courier plus intend to start a small venture from the new property , as a courier keeping books on the property i have to inform the council of this plus as its classed as using any property as a part business , i fully intend to park the van on site , the new venture without saying too much will be small and very part time , i will continue to help out the old fella , in a few years he will be signing the business over to me ,

because of this its a total mess to try to present a business plan , i can borrow upto 5 figures from my father , i also have a friend whom i can borrow the same however id prefer not to do this at all as hes a builder and know he will take over a good portion of the property until paid back , its to be our home rather than a concentrate industrial unit

im slightly stumped for direction , a quick weigh up and i can afford the property , getting the finance together is the key , im trying to find a way of keeping the interest to an absolute minimum , i have wondered if it was reasonable to assume that once we have moved in and could present figures if it would be possible to at this point mortgage the property ? im wondering how banks would perceive giving a re-mortgage on a property thats been financed this way , this would solve my problems i would have thought

i should also say the property is an auction property , i couldnt make it more complicated if i tried !

izzzzythedog

getmore4less wrote: »

What income can you prove between you and what is the value and mortgage on the current house.

What will it rent for

about 15 thou net

there is something like 55 grand collateral in the house , im unsure of the monthly cost but call it say £200 without the insurance

rent would be 575 a month , the house could hit £600 however i would be renting it to a long term friend , the village we live in is full of people who cant afford to buy a house and rental are almost no exsistant

holly_hobby

Getting any type of residential mge on this, from my experience, will be a no go, at best - you may persuade them to see it as a semi-commerical (as you will be living about the property) - but this is not a semi commerical in the same context as applied to Buy To Let mges, as there is a commerical bus element to the equasion.

Semi - commerical rates, you in general looking at bank svr & a loading prob 1.5 - 2 % for a semi, absolute max ltv of 70%.

You could, if you are to rent out your current home, release some equity from this on a BTL remortgage. (anticipated rental income needs to be 125% of monthly mge payments (use 6% on interest only as a ballpark fig for affordability calcs).

Max LTV on BTL remge 85% (with 1 lender), obviously the lower the LTV the larger amount of lenders available to you. Could this be an avenue to explore ?

Holly

Crossed with Izzy's post ...

holly_hobby

Ok - your income of 15k jnt - isn't sufficient to meet BTL criteria (which is gen 25k unless you are a portfolio landlord), and isn't really sufficient to support 50k proposed borrowing (over 3 x jnt inc) .

Other than seek if a commerical provider will use your current property as security (with permission of 1st charge owner), I am afraid that, at this current point, its a no-go.

However, I would love for a WOM broker to prove me wrong - may be worth a chat (make sure no fee) just to see if they have any other route to be exploited.

Its comes back I think to this, or asking the family bus to provide a bus loan - if you are determined and believe that the venture you propose is viable and a growth area.

You have obv worked hard to gather savings and live within your means .... I just wished I had another route to finance for you ...

I do wish you well & good luck

Holly x

opinions4u

The local authority may not allow planning permission for this sort of unit to be used for residential purposes.

izzzzythedog

ltv i would guess to be about 60% on the new property

to further complicate things my present mortgage is with the bradford and bingley with mortgage express , seeing how b+b arnt issueing mortgages anyore then i cant approach them and ask , also due to them wrapping up that side of the business there is no early repayment charges and hence we are taking advantage and paying extra , id be loath to loose this so couldnt remortgage 30k and buy the other place outright

holly_hobby

Well then ... you are between a rock and a very hard place ...

You need to speak to a commercial broker on this.

H

izzzzythedog

opinions4u wrote: »

The local authority may not allow planning permission for this sort of unit to be used for residential purposes.

its been used as duel function with tax paid ( council and bizz ) on both since 1996 or maybe before ? id be taking over its existing usage , this is the main reason im doing my best , its not offen you can buy a property such as this unless its a shop and then its normally the shop that dominates , in this instance its a house with a huge single story unit on the back , its basically the rear gardens walled and undercover

i had a unit lined up but this would bypass the need and save me a fortune ( 10 grand a year !)