2nd mortgage for run down auction property

kgall

Hi,

Uh oh, we have fallen in love with an auction property! We would need to get a second mortgage as we would need to first renovate it before moving out of our current house. Is it possible?

We currently have a £123k mortgage on our house. The house was bought for £140k however after improvements estate agents have now valued it at £155k.

The auction house run down but set in 5 acres of land. The house has not been touched in years and will need a complete renovation. Although it has water and electricity and is water tight the previous owner basically lived without a bathroom (used a neighbours) and basically no kitchen. i.e. it is not currently habitable.

It is likely to sell for at least £250k (as there is so much potential/land). We could only go up to a £40k deposit. My, and the only, salary is around £70,000. However my net pay is higher than would be expected (minimum of £4,500 a month) as a portion of my pay is tax free (hardship allowance).

So, could we get a mortgage based on those figures, and if so how high? Will a lender lend on such a rundown property (that we intend to renovate)?

Many thanks in advance,
K

Yorkie1

As the house has no kitchen or bathroom, I believe that it will be unmortgageable under the usual residential type products.

kgall

Thanks Yorkie. What sort of mortgage could we get?

nexus7

Just a thought...

Have you considered selling your current place, and hiring/buying then reselling a fairly decent sized mobile home (30-40ft) e.g. much bigger than a caravan whilst you complete the renovations?

It totally depends on your situation and might not be suitable if you have really young children or couldn't stand to live in a mobile home for a few months etc.

Thrugelmir

kgall wrote: »

Thanks Yorkie. What sort of mortgage could we get?

No residential mortgages available.

kgall

Nexus, that is not a crazy idea and one that I did consider. However I don't think it will work with the family and we could't sell our current place in time to have the mortgage available for the auction.

If residential mortgages are not avaiilable are there other sorts that would be? Where should I look to find these?

Ta

mystic_trev

kgall wrote: »

Nexus, that is not a crazy idea and one that I did consider. However I don't think it will work with the family and we could't sell our current place in time to have the mortgage available for the auction.

If residential mortgages are not avaiilable are there other sorts that would be? Where should I look to find these?

Ta

Savills launched a bridging loan service (for Auction Properties) last year. Initially it was just for London and the SE, they may have extended that by now?


http://www.mortgagesolutions.co.uk/mortgage-solutions/news/2030353/spf-launches-exclusive-bridging-deal

Phil_rich

What is this 'Hardship allowance' that applies to someone earning £50k+ ? ?

Phil_rich

And back to the question, it sounds like you will need 2 more mortages. You need £250k+ to buy the place then another ??£100k+?? to renovate, before you can sell your current house.

kgall

Phil,

It is from having to work in Sudan for 4 out of every 8 weeks.

We won't need a second mortgage as my salary and a bit of left over cash in the bank should cover the renovations.

Having a done a Google search it looks like our options may be

· a bridging loan and then normal mortgage when the house is habitable (sounds risky and expensive)
· a house builder/renovation mortgage
· an agricultural mortgage as there is so much land

Any thoughts?

bigadaj

All risky, agricultural won't apply as you would need many times that land to be commerically viable.

Some of the so called ethical lenders may be possible, thinking ecology bs, co-op etc as they may be able to arrange staged payments though your gearing might be too high.