Mortgages for property renovation?

hollyblue

I am looking to buy a property in need of renovation.

I already have my own home which I have a mortgage on and a buy to let property also mortgaged which I purchased in January this year which is tennanted.

I am looking for a property around £110,000 and am able to put £10k down as a deposit and obviously have the cash to renovate.

I am wondering how difficult (or easy) I may find it to get a mortgage given that I have 2 already. Are there any mortgages/mortgage companies who speacialise in these sorts of mortgages given that I will be looking to pay it off in around 6-12 months.

I work full-time so I do have an income and intend to continue working whilst renovating and have around £60k equity in my buy to let.

Any advice or pointers would be gratefully received.

herbiesjp

This can be done, but it will depend on the state of the property in question

What kind of condition will it be in? HOw mcuh do you envisage spending on it.

There are ways of getting agreed easily, but you will need to make sure that you do not take out a mortgage with any Early Repayment Charges on this.

HTH

hollyblue

Thanks Herbie

I'm planning on spending up to around £15k. Property is habitable. It needs reburbishment i.e. tidying up, new kitchen, bathroom, windows etc. Nothing structural I hope! I intend to have a survey to avoid any nasty surprises.

In short it belonged to an elderly person so modernisation really.

herbiesjp

It sound slike a good plan as long as you have been quite ruthless in your estimates.

Have you had any estimates as to the property value post-modernaisation? Do you have enough there to make a good return?

MortgageMamma

Will you be renting the property out once you have renovated or are you planning to sell it on and hopefully make a profit?

This is pivotal to advice on which product you should be looking at taking.

I would suggest you remortgage your buy to let if you are not tied into the mortgage, and raise a deposit that way, the perhaps look at a buy to let mortgage for the new purchase

PLenty of lenders will looks at it, there are even lenders who do Btl mortgages without income assessments

toonfish

as stated above, the best course of action depends on the final intended use of the property. As long as it's habitable someone will do a buy to let on it which may be the cheapest option, even if you intend to renovate and sell.

hollyblue

THanks all for your advice.

My intention is to renovate and sell on but I could perhaps consider renting it out for as long as it takes to get the BTL mortgage and then change my mind (wink wink).

I'm having a look at the property on Tues with the EA but having looked through the windows and letterbox (!) so far, although it is habitable I can't imagine anyone actually wanting to rent it in its current state therefore it would probably be difficult to put a rental value on it as is. Will the BTL lender be concerned about that or will they base their figures on the values as if it has been improved?

PoorDave

Surely a lender can only consider the property in its present state.

After all, if it has to be repo'd at any point (heaven forbid) they're going to want the moeny they gave you back in full.

toonfish

hollyblue wrote: »

THanks all for your advice.

My intention is to renovate and sell on but I could perhaps consider renting it out for as long as it takes to get the BTL mortgage and then change my mind (wink wink).

I'm having a look at the property on Tues with the EA but having looked through the windows and letterbox (!) so far, although it is habitable I can't imagine anyone actually wanting to rent it in its current state therefore it would probably be difficult to put a rental value on it as is. Will the BTL lender be concerned about that or will they base their figures on the values as if it has been improved?

they'll base it on current state, but some simply rely on a letter from a local (friendly!) letting agent

hollyblue

Surely with a BTL afer you have put down your 15/20% deposit if they had to repossess it they would get their capital back. However, my concern is the rental figures stacking up i.e. the acheivable rental income being 130% of the mortgage payment (which I believe is the usual criteria thereabouts), which is where I think I'm going to have difficulties because although it is habitable its not desirable!

toonfish

hollyblue wrote: »

Surely with a BTL afer you have put down your 15/20% deposit if they had to repossess it they would get their capital back. However, my concern is the rental figures stacking up i.e. the acheivable rental income being 130% of the mortgage payment (which I believe is the usual criteria thereabouts), which is where I think I'm going to have difficulties because although it is habitable its not desirable!

some will accept 100% coverage, or if there is a shortfall allow this to be covered by your salary.