100% Mortgages on investment home?

lozzypops

Hi All

I was wondering if you could help me. I already own a home but have been thinking along with a friend of mine to buy a second home run down and in need of modernising as an investment. We have no plans to live there and only want to purchase it give it a face lift and slap it back on the market. We ive in an area where high spec houses are sought after and the 'in need of modernization' homes can be bought for a good price. The problem is we have enough saved for the refit and minor building work but do not have the 15% deposit required to buy a 2nd home that a lot of Mortgage lenders require. Does anybody know if there are Mortgage lenders that will provide 100% mortgages on investment/2nd homes?

Thanks in advance

Doozergirl

I've not come across any mortgages like that. The risk would belong almost entirely to the lender and as you work, you devalue the property in the short term. We've done it plenty of times and have a good relationship with the bank now, but there's no way they'd lend us the full amount!

You need to cover mortgage payments and the buying and selling fees which really add up also.

Keep Saving

lozzypops

Thanks for that, we have enough moeny to cover the mortgage repayments and fees, as well as probably 15k for work - just not the deposit. As you have done it before would you be able to tell me what deposit you generally put down - 5% 15% etc? - Who with if they're good :-)

Doozergirl

We used to use our Financial Advisr who would find us the best mortgage, Interest Only with low entry and exit fees. You find that if they have lower fees, the interest rate is sometimes higher, so you have to get him to calculate the total cost over the estimated time frame for the project to see which actually works out cheaper. You need a 15% deposit. I don't think we ever used the same mortgage company twice, just whoever was offering the best deal at the time.

We have our own company now and a track record so our business manager will lend us up to 75% of the value of the property at very short notice. We pay for the build costs.

I'd be careful about allocating £15k to build costs before you've found a property - they're all different!

ds1980

Just buy it on a residential mortgage of 95% or 100%. they wouldn't know any different!

ds1980

there are also self cert builders mortgages of 95% and they will lend you 95% of building costs in general. There are loads of options open to you without spending a lot. Id prefer borrowing the money to do the work. If you sell quickly your only going to pay a very little amount and you could save the money you already have for costs that are unexpected, offset the interest (if you have any) buy a new sports car (i have one for sale) or take the family and kids on a nice holiday im sure they deserve.

Alan_M_2

Borrowing the best part of 100% in this manner isn't investing, it's speculating.

There's nothing wrong with that in itself if you think it's the way to go, but understand it isn't what you'd consider low risk.