2nd Mortgage advice

SDCandT

HI All!

As things currently sit:

We own a house which is currently in neg equity, but should be 100% LTV by June. The plan is currently to refurbish an existing dwelling on a family site and a quotation of £35-40k has been obtained from a builder to complete the works.

This leaves us with a number of facts
Our Current house valuation c £150,000
Original lending £178,850 mortgage plus £10,000 unsecured loan
Payments to date made against negative equity c.£21k
Rental potential £600-£650 per month (estate agent was optimistic of tenant availability)
Outline Plans for family land(these can be as flexible as needs must): payment to family, initially, of £150k for land with them returning £50k back to us a 'gift' which we could then use to pay the builder etc. we then payback remaining monies over time.

Whilst, moving forward, it may be most straight forward to cut the losses on our current property, logic (in our heads at least) suggests that renting out our current house (even at a loss in the short term) would be more sensible than an immediate hit of £30k+...providing we could secure a 'second' mortgage for the new site. If we could even move one property into one person's name, could the other start afresh with the £150000 for the second house using the strength of the site value against the loan.

Regarding additional facts: Currently getting approx valuations from an estate agent this week for: (expected to be c. 225k)
House as it sits (unmortgageable)
Site with full planning permission (unimplemented)
Projected valuation of the refurbished house

We are:

Not married
50/50 split on current borrowings
Current lending through Northern Rock Now NRAM

We earn approx 38k and 41k

Likelyhood of a second mortgage?? Advice? Strategy/milestones?

I appreciate your time!

kingstreet

So you're trying to raise finance to renovate a property which belongs to a family member which is presently unmortgageable?

The_J

How have you got that out kingstreet? I've read it 3 or 4 times now and have literally no goddamn idea what he is talking about

kingstreet

There's loads of verbiage about the current property, but the bits I picked out were;-

to refurbish an existing dwelling on a family site and a quotation of £35-40k has been obtained from a builder

and

House as it sits (unmortgageable).

TBH, looking at these two issues, it's likely to be a non-starter before we even begin to consider the existing property/mortgage.

The_J

Ah I get it, so there is a house on the family plot that needs significant work and they are wondering how to raise that money given that they are over 100% LTV on their current property?

Well, development finance might be worth a shot. Speak to a commercial broker.

SDCandT

Hi guys,

My apologies for the lack of clarity. You have managed to extract he core facts anyway. You are correct to assume that the plan is to renovate a house on a family plot... And the question is really about the likelihood of securing funding to enable this to happen whilst retaining our current property as a rental.

Apologies for the waffle, was trying to present all the facts

Thanks for help so far

SDCandT

Hi kingstreet,

Thanks for you input. Your reckoning would suggest that the unmortgagability is a deal breaker?

Could the house be bought as a site and refurbished from there? If the site bought for 150 and 50 was gifted back to do the renovation... That would provide a house on the site??

Is that completely unworkable?

Thrugelmir

SDCandT wrote: »

Could the house be bought as a site and refurbished from there? If the site bought for 150 and 50 was gifted back to do the renovation... That would provide a house on the site??

Is that completely unworkable?

Without the building. The site won't be worth anywhere near £150k.

kingstreet

Who owns the site/property and who is raising the money to renovate/build on it?

Certainly, you have no chance of raising a mortgage on it if the property is unmortgageable and the question of a deposit is going to raise its head at some point if you plan to purchase it from the current owner - family or not.

You need something like this, but you need to address the owner/borrower issues first;-

http://www.buildstore.co.uk/