How does a pensioner get a mortgage?

Greyhoundgal_2

Help!
My mother, who only has her state pension, wishes to move house. It is on the market and not selling. She obviously has no mortgage, and the house is worth a great deal of money.

She has been advised to consider modernising it, ie getting rid of the 1970's decor, new kitchen, bathroom, windows, re pointed, garden tarted up, floors re carpeted etc, but needs to somehow raise the funds. She has no savings. This work has been estimated at around 150k.

This may seem a lot, but is only a tiny fraction of what the house is worth. The "uplift" in having this work done is estimated at least double this amount, so well worth it.

How does she get a mortgage to do it? She would obviously pay the whole lot off as soon as the house was sold and would factor in monthly payments out of the amount borrowed initially.

I have no money to "lend" her, unfortunately, and the only IFA I have approached has wrung her hands and said it can't be done, without an income, which must be nuts, as surely the house itself is the security?

What am I missing here?

Thanks in advance!

Dave_Ham

There will be takers, although it will not be cheap.

It is likely to be financed through bridging finance, although there will be strict timescales to getting it done and selling up.

Are you sure this a double your money exercise?

Good luck

Thrugelmir

Greyhoundgal wrote: »

This work has been estimated at around 150k.

Seems excessive. Just to make a house saleable.

Greyhoundgal_2

I am confident that it WILL cost this much to do up. It is a very large house, which hasn't been touched since the 1970's.

We have had 3 builders around and this is the cheapest quote.

The estate agent, Knight Frank, are completely confident that if the work is done, it will raise the amount they can get for her by at least 300k.

Is it not possible to get a mortgage in her circumstances?

We are not happy for her to get bridging.

Thrugelmir

Greyhoundgal wrote: »

Is it not possible to get a mortgage in her circumstances?

Without sufficent income. No possibility.

holly_hobby

If Mum doesn't have the income to support the borrowings, no a residential mortgage is a no go.

A thought could be, and given the circs and apparently gted'd return, that you could pursuade a builder to accept settlement of their fee when the property has sold ? (a legal agreement could be drawn up to reflect the arrangement)

Other than that, or the sourcing of bridging finance/investment bank arrangement, you are quite royally stuck with what you have I'm afraid (without getting into other convoluted ownership arrangements)

It may also be worth considering whether it would be in Mums best interests to be having all this really quite invasive works completed at her time in life, unless of course she was comfortable with this/moved in with you temporarily etc.

Hope this helps

Holly

bigadaj

Can't see many builders taking that level of risk and delay in payment, at least without a significant additional fee.

What is the house on the market for currently, would it not be better to drop the price to secure a sale, certainly a lot easier.

At the top end of the market then individual requirements can vary greatly, and doing the work creates a risk of reducing the pool of buyers. It's not as though you can slap in. An ikea kitchen and paint things magnolia

Southend1

I would certainly think twice before spending £150k on the say so of a [STRIKE]compulsive liar[/STRIKE] estate agent!

Wh05apk

Aside from a bridging / personal secured loan being rolled up, the only other option could be equity release, although these are intended as long term options, and so will likely have sizeable penalties on repayment (but if you confidently expect to make £150k by doing this, it may be worth paying the penalties)

UsernameAlreadyExists

Hmmm ....
So you're saying that if the house is currently valued at (for example) £500K then doing £150Ks worth of work on it means the estate agent reckon they'll be able to sell it for £800K??

In my simple mind, this tells me that the house is actually worth ~£650K ... and not £500K. So where did the initial price come from?

EDIT: I've re-read your original post, and seen that it's on the market and not selling. If this is a £500K house surrounded by £800K houses ... then the £300K shortfall may well be putting off a lot of people as it's massively lower in price and on the surface seems to require £300K to fix when in reality you've said it's only £150K

keith969

She has several options:

1) Auction it. If it really is worth a lot of money with work done on it, this will attract developers - they will be aiming to make a profit, but its because they are taking on the risk of financing the development.

2) Put it on the market with sealed bids by a certain date. You don't have to accept an offer you don't like.

3) Drop the price to a realistic figure, as that's the reason it's not selling.