Mortgage or Loan

zarney

I have a house that was left to me by my mum, its been empty since 2007, needs some renovation, no mortage on it.

I want to get some cash to renovate it with some left over to tide us over, we have our own company which is not doing too well due to recession etc. So getting really short of cash, I have been able to get another job but the money I earn wont pay for our house the house left to me and all our outgoings over the month.

As the house in question has no mortgage would it be a better idea to get a mortage loan on it, if this can be done of course or get a loan using it as security ?

Don't really want to have to do either but needs must, and I don;t want to default on the mortgage payments on the house I live in.

My credit ref is probably awful as when business got bad a couple of yrs ago had to have a big overdraft which I still have, and had to speak to CC companies to get payments reduced for a few months and I was late paying some other stuff.
I still use a Ccard sometimes but mostly pay it off each month.

hazyjo

Why are you doing it up? To sell? To live in?

If the former, why not sell as it is and take the hit? Would release some cash.

Jx

zarney

I dont want to sell, it as its a good investment to keep. I want to renovate it and rent it out. There is a demand in the area for rentals and not enough to fill that demand + rental value is good on it could get aroun £700 - £800 per month. Would take too long to sell and would have to sell at way below its value.

Wobblydeb

What you're proposing is really risky. What happens if you renovate the house, and then cannot sell or rent it? You'll have two mortgages to pay then, and if things haven't improved could stand to lose both properties.

You could do what hazyjo suggests - the cash would help you keep the home you live in.

Alternatively, if you would rather keep your mum's house, how about moving into it, and renting out your current home? You could then renovate your mum's house when finances allowed, and avoid capital gains tax if you later sell it.

zarney

The house I want to renovate is not fit to live in at the moment, its got no kitchen and pratically no bathroom I started doing it up a couple of yrs ago when I had money to do it. It is all ready for a new kitchen & bathroom just dont have the cash now.

The house I live in is also our business location with a specialist computer room in an extension, the other house is not suitable for the computers no air con or fire protection or internet access etc. Cannot rent the house and use the extension seperatly as it has no entrance to the ouside.

Rock & hardplace comes to mind, unless hubby can get some contract work soon will have to take out a loan that is secured on the empty house, damn the recession.

hazyjo

Most people don't have a second home as an investment - especially when they're not in a solid financial position. I wouldn't really class property as much of an investment at the moment anyway.

I would not be a LL unless absolutely forced into that corner. You will be responsible for every repair, etc for that property for probably at least a year. What if tenants trash it... what if you just can't afford it? What if the roof needs replacing, if the boiler dies, what if... just too many what ifs. Spend some time reading this forum. Becoming a LL might not seem such a good idea.

When you say it will sell below its value - its value will be what it sells at. If you mean it was at one time worth more, that's not its value any more. Or if you mean that before spending money on works it would be worth less than if you did it up, who's to say the market won't have dropped again and it'll be worth even less?

You say you can't afford to wait to sell it - but won't it take a while to do it up anyway? Price realistically (or consider auction with a reserve) and it will sell.

Jx

kingstreet

It sounds like the property is unmortgageable and your credit and income situation appears to confound any chances of that route anyway.

I concur with the others. Sell it as it is and get yourselves financially stable before you start taking risks.

arbrighton

kingstreet wrote: »

It sounds like the property is unmortgageable and your credit and income situation appears to confound any chances of that route anyway.

I concur with the others. Sell it as it is and get yourselves financially stable before you start taking risks.

It does seem like madness to attempt to take out either a mortgage (which is unlikely to be possible due to no kitchen so property is deemed inhabitable) or an unsecured loan when you already think you'll be struggling to repay.

It is not a good investment at the moment if inhabitable, not suitable for letting and requiring either a mortgage (where rates are only going to go up) or another loan to get it that way.

As others have said, there are a lot of things required to be a landlord, many of which cost.

Someone will want to buy it and be prepared to fix it up- you will not lose money by putting it on the market, and as long as you are not over-optimistic regarding valuations, it will be a chunk of money to put into your business or current mortgage

zarney

to be honest that is my thought sell it as a do it up the house its self is sound and its been partially renovated anyway, agree being a LL is not as easy as it sounds would rent via military as lynham is moving to the base not too far away to plenty of demand, but as you say what if stuff starts breaking, maybe the rental would not cover it all.

Other half is dead against selling it though, he is of the oppinion that its still an investment into the future and we may want to let our son have it later...Selling would be the best option I think though agreed, now to convince him of that. thanks for your input