Charlene's FTB - Diary 2007

Tiger_greeneyes

That house looks lovely Charlene! I know New Addington well - all three of the survey offices I ran used to cover that area.

What you could do is go and have a look at the other houses in the area - look at whether any major works have gone on to remedy any concrete problems. If not then it's a good sign Something to look for is whether any of them have any brickwork standing further out than the walls on your house. I don't recall any of the houses in the area being refused for mortgage purposes, except maybe going back to the early 90's - and even then it wouldn't have been that many, they're much more open minded these days

wotless

Sincere apologies for hijacking this thread but the sticky thread on FTB's seems to be collecting dust...I have a few (a lot) questions for the Mortgage Brokers or those that can provide an informed opinion that frequent these forums:

Current Situation: A close friend and I cannot afford to get on the first rung independently and so have agreed to take the plunge into the world of home ownership together once we have saved a little pot of capital. We’re both 24, both in careers where our wages will rise in the next couple of years, both currently on 22k before tax pa. By this time next year we will have 20k saved between us. We both live in London and wish to remain here.

A bit of background: I am an assistant planner currently studying an MA in Planning, but my BSc was in Planning Property and Development, as such I can knock up residuals, development appraisals, cash flow analysis’etc, my friend works for a maintenance company therefore any project we embark on won’t be completely blind, we both have a good knowledge of construction/property and have extensive contacts i.e. BS’s, QS’s, Architects, structural engineers and we pretty much have a group of friends that make up a whole gang of trades.

The Question: We plan to treat our first property as a business venture, although we will be moving out of home we want to buy somewhere quite run down (we’re prepared to live in squalor) and we plan to sell on quickly…in this situation what form of mortgage would be best suited to us? We plan to use the 20k as a deposit and for all other extra fees - we realise we may not have much change after all of this for works and so plan to utilise some 0% interest free credit cards to pay for works instead of paying out of our own wages, which will no doubt be taking a hit with mortgage repayments. What kind of amount could we expect to get when considering our combined incomes and our pot of 20k? Would knocking up a fancy business plan inc. residual, dev appraisal and cash flow analysis’ convince, allied with my qualifications & occupation, and our extensive contacts convince lenders that (1) their money is safe in our hands? And (2) would they be willing to lend us a little extra if the right investment opportunity presented itself?

Comments from IFA's and Mortgage Advisors would be most welcome.

Thanks,

David

lynzpower

David,

my advice would be to find the property first. Inn my experinece those in need of refurbs are usually the first ones to fly off the shelves!

wotless

Locating properties isn't something I will have trouble with, that aspect is dealt with...I'm merely interested in figures and what type of mortgage is best for my objectives. My original post is somewhat long winded. Here is a simplified scenario:

* Two individuals on 22k pa
* 20k pot of capital
* Objective is to buy a vacant/shabby house
* Both with professional occupations in Property/Construction Industry.
* Qualifications between us = BSc Development Degree (RICS accredited), CAD City & Guilds Cert, MA Planning Degree (RICS/RTPI accredited)
* Extensive contacts in property professions/building trade (essentially a whole gang, BS's, structural engineers etc etc on mates rates/favours)

**Essentially development strategy and funding would be planned to the Nth degree and could be illustrated to any would high street lender or Broker in a business plan.

Question:
(1) What kind of mortgage is best suited to us if we plan to live in the property for a short period of time (year to possibly 18 months as a max) and then sell on?
(2) What kind of sum could we expect from a mortgage lender? Taking account of above info - An estimated lump sum guesstimate based on experience.

Cheers,

David

CharleneUK

Tiger_greeneyes wrote: »

That house looks lovely Charlene! I know New Addington well - all three of the survey offices I ran used to cover that area.

What you could do is go and have a look at the other houses in the area - look at whether any major works have gone on to remedy any concrete problems. If not then it's a good sign Something to look for is whether any of them have any brickwork standing further out than the walls on your house. I don't recall any of the houses in the area being refused for mortgage purposes, except maybe going back to the early 90's - and even then it wouldn't have been that many, they're much more open minded these days

Oooh tell me more! :rotfl:

I will definitely have a look at some more houses........ So, do you think I should give this one a look then? I really do love it!

Tiger_greeneyes

Go for it, it looks lovely! Look around at the neighbouring houses for signs of extra skins of brickwork on the outside of the concrete

Doozergirl

David, based on what you're saying then I'd get a residential mortgage. If you're both on £22k a year then the most you could borrow at the moment is 5x joint salary. I'm not a mortgage broker however so don't know any more detail than that. What you do need to be aware of with shorter term mortgages are entry, exit fees and penalty periods as they can make a significant difference over the short term. You're going to live in it for some time, so you avoid paying tax on any profit you make.

Business wise, we can borrow a significant percentage of the value of a property which isn't dependent on income. But we need the deposit to match the LTV and we pay slightly more interest than we would on a mortgage and we are, as a business, obviously liable to pay tax on our profits.

Go and see a whole of market mortgage broker

You'd also probably be better starting your own thread for extra advice as your scenario is very different from charleneUK's

wotless

Thanks for your reply

CharleneUK

So I'm off tomorrow! I searched online for various questions and have come up with a few of my own (there may be repeats as I've copy and pasted!) If there's anything you think I've left out, please let me know! Wish me luck.


When was house built? After 70's would be good
What type of concrete construction is it?
What is the supporting frame?
Is this particular class of construction classed as defective
Any structural defects
Why is vendor selling?
Have any major works gone on to remedy concrete problem? (if there is one)
Something to look for is whether any of them have any brickwork standing further out than the walls on your house.
Type of heating
Type of glazing
How long has the house been on the market
Check flooring, windows and roof, check outside pavings.
How long have they owned it
Look out for power cables, factories, lorries passing
What are the neighbours like
Look for damp patches/flaking paint/mould/rotten window frames
Establish boundaries/common accesses—drives/rights of way/fences
Consider privacy/security/alarm system/doors and locks/lighting
Is the house already under offer?
Does anything come with the house?
Busy road?
Near a pub?
Check the boring stuff: the boiler, the roof tiles, the guttering, the loft, and the cellar. Don't forget the fusebox - an ancient device could indicate the house needs rewiring. Turn on taps and flush the loos.
Have vendors found a place to move into?
What work have they done to the house? Ask to see any certificates or planning permission documents.
What work have they done to the house? Ask to see any certificates or planning permission documents.
Cost of council tax
Views through the windows of the house
How old is the central heating
if there is a loft, has this been insulated? If so, how long ago
does the property have cavity wall insulation
has the property been altered in any way and if so are the relevant planning and building control consents available to inspect
is there any sign of subsidence (e.g. major cracks in the walls or the doors sticking)
is there a smell of damp or any other sign such as the walls feeling damp, the wallpaper peeling/paint bubbling, watermarks or mould
do the window frames have cracking paint? (If you can press your finger easily into the wood it's rotten)
are there sufficient power points, how old do they look

Doozergirl

Did you go to see it? Did you like it?

You've done most of your solicitors and surveyor's work there too, lol, good research! I hope you didn't frighten the vendors with all of that in one go!

They probably won't know the answers to some of your more probing questions regarding the build, but if you ask whether they have a mortgage on it (explaining the conrete thing) and how long they've been there, hopefully the answer will be positive for you. If the answer is yes (which is likely as, being in New Addington it would probably have been under RTB at some point within the lifespan of the average mortgage) then it's positive because you already know there are lenders out there for you

You know to go and see an independent mortgage broker and they will help you with this type of build also which might help give you some reassurance before you start spending out on surveys etc.