Renovation Mortgage

shanghailady · 4 April 2012 at 4:42PM

My partner just bought a repossion for £160k three weeks ago for cash. She now is trying to get a mortgage or low interest loan of £40k to completly renovate the house. On completion the house would value at £230k and would rent for c£1100 per month. She earns before tax £60k a year. So far we have one potential from RBS at a very low rent but they are asking for all contractor quotes. We are doing a lot of the work ourselves and using local subcontractor friends, I was in building business for last 20+years so all will be absolutly high quality workmenship. The other banks are saying that it must be habitable, which of course it won't be until renovations are complete. Some say she must have owned it for atleast six months before they can consider it. We can afford, barely to use the rest of our savings but don't really want to. can anybody offer any suggestions?

The_J · 4 April 2012 at 5:02PM

1) Commercial mortgage, no semi commercial (BTL) lender will consider this.
2) Use your savings, remortgage after 6 months ownership
3) Interest free credit cards? Repaid with remortgage.

Dave_Ham · 4 April 2012 at 5:09PM

99% of lenders will not remortgage within 6 months within these terms.

To add, they will see sight of what was paid for it so if the plan was to max out the remortgage, the banks valuation is likely to be closer to the price paid rather than the market valuation.

Bridging finance would be easy but expensive. Some unsecured loans give a 3 month break at the beginning of the term and as The J says 0% credit cards may be the ticket.

Good luck..

On a side note, if you are going to rent this out would suggest you re-think the top quality workmanship with simple, practical, cost effective and not easy for an idiot to destroy (just in case of course)