Hi, Personal loan for un-mortgageable auction property?

Jack_Johnson_the_acorn

Hi,

Myself and my fiancee want to purchase an auction property, It's un-mortgageable, we have £10k-£15k saved but the property is likely to go for between £30k - £40k (1 bed apartment). We have a combined Annual salary of around £45k and we both currently live at home. She has a personal loan with around 2 years and £5000 left to pay.

Are we likely to be successful for a joint loan of £20k-£25k. I don't want to apply and be rejected as it might affect our credit ratings.

My parents have offered to remortgage and borrow us the £20k, But I'd prefer to do this without their help......

ANY ADVICE!

poppysarah

Why is it unmortgagable?

Jack_Johnson_the_acorn

It's an apartment, there is no management company.... plus there is a tenant who can't be disturbed prior to sale so there would be no inspection of the property for the bank.

The management company is set to take over in November.

G_M

Ooops! Tenant?

Have you checked out their tenancy? Do you know what rights they have? Are you planning to be a landlord (since it appears you will become one)?

GDB2222

Do promise that you'll have all your finances in place before you bid at the auction.

You also need to do your survey and legals before then, so it's expensive for you if you get-out-bid. Bear in mind that auction guide prices are set deliberately low, to get lots of people interested.

Turning to your original question, those are very big personal loans. The max you can get is £14,999, and you'd both need to take out pretty much the maximum EACH. I have no idea whether your credit rating would support that. Why don't you start off by both getting credit scores? You can do this free by taking out the 30 day trial at http://www.creditexpert.co.uk/ Don't forget to cancel before the 30 days are up.

GDB2222

BTW, personal loans will be expensive. The min APR will be 6-7%, whereas I expect that your parents can remortgage for 2-3% less.

I'm also concerned that if you borrow 2 x £14,999 plus have say £10k savings, that might not be enough. If the auction guide is £30-40k, it might well go for more than the top limit. It varies between auction houses, but some set the reserve price at the guide and expect to get much more.

puddy

this tenant, he hasnt got a lifetime interest or anything has he? you might never be able to get vacant posession or he might never move out

how come its got no managment company, it has a freeholder yes?

chappers

tenant, no management company,un-mortgageable, personal loan and auction....My advice, walk away.

GDB2222

chappers wrote: »

tenant, no management company,un-mortgageable, personal loan and auction....My advice, walk away.

Well, the lack of management is easy for the leaseholders to get together and sort out, and that would make the flats mortgageable again, so the value will go up. Likewise, if the tenants are on an AST, you can get them out eventually. I would definitely wander round and have a chat with the tenant/the neighbours.

Jack_Johnson_the_acorn

GDB2222 wrote: »

Well, the lack of management is easy for the leaseholders to get together and sort out, and that would make the flats mortgageable again, so the value will go up. Likewise, if the tenants are on an AST, you can get them out eventually. I would definitely wander round and have a chat with the tenant/the neighbours.

A new management company has agreed to take over the running of the building, set to go through in November. I have read the tenancy agreement and there is 6 months remaining. I don't want to live in the property straight away to be honest and would be very happy for them to continue renting for 5 years.... But either way it's fine.

I have a meeting with the loan sharks at Santander at 3, so I'll let you know what rates if anything that I'm offered, on the phone Santander have said they will consider lending me £20k @headline rate of 8% which I want to pay off over 5 yrs.

GDB2222

Jack_Johnson_the_acorn wrote: »

A new management company has agreed to take over the running of the building, set to go through in November. I have read the tenancy agreement and there is 6 months remaining. I don't want to live in the property straight away to be honest and would be very happy for them to continue renting for 5 years.... But either way it's fine.

I have a meeting with the loan sharks at Santander at 3, so I'll let you know what rates if anything that I'm offered, on the phone Santander have said they will consider lending me £20k @headline rate of 8% which I want to pay off over 5 yrs.

So, if they lend you £20k and you have £10-15k in savings, aren't you going to be rather short, unless the property sells for the bottom end of the guide price (which is very unusual)? What if it goes for £40k or £45k? I appreciate that it's not worth bidding it up and up, but it would be a shame to spend all the fees up front if you haven't even got enough to get to the top end of teh guide price range.