Another Right to Buy thread

Mrbonduk

Why do you say that?

Mrbonduk

Am I to assume no one has been in this position before?

ILW

Mrbonduk wrote: »

It would be lease hold, so I would guess the land owner, the council. Might be wrong tho.

The freeholder would generally retain ownership of all the external parts including the loft and roof. The conversion may not be that simple.

Senior_Paper_Monitor

I'll ignore the freehold/leasehold/attic space issue for the purpose of this reply - but they are genuine potential issues.

Since you ask about responders' experience - we specialise in right to buy mortgages, have researched this area extensively, have as many exemptions on standard terms in place as anyone I know and handle a couple of right to buy enquiries a day. Also since last time I answered that question justifying my knowledge/opinion some halfwit dobbed me in for 'touting' for business - and led to a 'toys out of the pram' session by both myself and a site moderator - let me stress I am not.

Notanewuser is incorrect - there are several lenders who will lend more than the discounted price for defined home improvements. However the total borrowing is usually limited to either 75% of current (not forecast) market value or, in a few cases, the product LTV (which can - but rarely -be up to 90%).

Borrowing above 75% will incur higher rates and put your income/credit history under greater qualifying requirements.

With three kids - assuming no outstanding debts - I estimate that you will need to demonstrate qualifying income (generally not benefits, except in exceptional circumstances) of in excess of £25,000 and probably nearer £30,000.

There are very serious issues in further investing in a property with a 5 year claw back in place - lenders are naturally cautious about any 'out of the normal lending' on RTB - I suspect that most lenders that would consider an 'off the wall' application of this nature would be looking for a 10% deposit from yourself over an above the discount - there are considerable costs (planning etc) in advance of any such application - in short I think the odds are stacked against this.

poppysarah

Mrbonduk wrote: »

I currently live in a 2 bed maisonette and have 3 children, I'm looking at buying this property and doing a loft conversion to gain 2 more bedrooms and a bathroom.

Chances are you won't own the loft or get permission to do anything in it.

Mrbonduk

I appreciate what you are saying, those who have concerns about loft ownership, but can we leave that as a given and work on the principle that I've done enough research in that area, to satisfy me that the ownership would be mine. Thank you to SPM, my earnings are above that range so that's not an issue, it's basically a deposit which I wouldn't be able to find, so if I could get a 60% of OMV as a mortgage that would be handy.

Senior_Paper_Monitor

Ok - even assuming all you state in the latest message is correct - this will not be a 'given' in terms of getting a lender to go ahead with it.

Mixing RTB and development is not the high street's favourite business format.

Mrbonduk

So would I be better off getting a mortgage for the full value of my discounted price then getting a secured loan for the building works?

kingstreet

I agree with what SPM has said. I'm not a RTB specialist, but have been arranging such deals for about 28 years.

You typically top out at 100% of the discounted purchase price. This is because lenders and councils don't particularly like buyers borrowing into the councils pre-emption discount/period.

There are lenders who will allow additional borrowing for home improvements and such an arrangement may be allowed upto 75% of market value. The improvements will be analysed by the lender, its surveyor and the council, to see if they will be permitted.

First thing to do is establish what you will be allowed to do and the likely cost. It will have to be done to building regulations, there will be no way to do it on the cheap.

Once you've done that, you can then look at the financing. I'd say if you can't do the purchase and improvement at the purchase stage, you'll struggle to do it later. The council would need to grant a deed of postponement if remortgaging, or agree to a second charge being registered and you would also need the mortgage lender's agreement to a second charge and this may not be granted as you already have a 100% mortgage.

I would suggest discussing this with a good independent or whole market broker before you proceed much further, once you've investigated the likelihood of being permitted to do such work, by the council.

Have you submitted an RTB1 yet?

Mrbonduk

I know the cost implications of a loft conversion, anywhere between 12,000 for a 'part conversion' where I sort all electrics plumbing walls finishing etc and they do the structural. Or up to 35/40,000 for a full finished dormer conversion. Planning permission is not needed as its within the permitted development. But obviously building regs need to be met. I haven't applied yet, as its a pointless exercise if I cant convert. And my main issue is financing it, hence wanting to know whether I can borrow above the discounted price.