how do i finance this?

ajbell

i have the chance to buy a show home for £310000 which the
builders will then lease back from me for £1550 a month for the year that they still need it.
How can I borrow £310000 for only one year then pay it back and re mortgage it as my own home when I will need only about £100000.
I currently have a house worth about £215000 which I will sell during the year.
Can you get a buy to let mortgage for only one year that it interest only?.

holly_hobby

You won't be living in it - so a residential mge is out.

You won't be letting it as a tenanted dwelling - so a Buy To Let mortgage is out (which would require a 25% deposit in any event).

This would be full commerical finance - with a min deposit of 35% to 40%, mge rate about 2% over base, hefty redemption pens and income having to support both commitments, due to the fact that the after 12 mths you'll be wout the builders income with no gte you can sell or rent either property at that time.

Speak to a commercial broker if you're really serious about this ... but I wouldn't hold my breath, why not ask for 1st option to pch when the site is fully sold.

Hope this helps

Holly

GMS

Is your current home mortgage free?

If so could you raise as much as possible on that and pay a deposit on the new property?

Get the solicitors to agree on the sale price and exchange contracts with the completion to take place at an agreed date.

You could then look to port the mortgage and avoid any redemption penalties (subject to criteria at the time)

This way the secured loan is on your residential property.

Ensure the lender is happy with the funds being used for the new purchase.

ajbell

My current home is mortgage free and I could put down around 20%.

ACG

Ignore my post. I didnt read all of the replies and i think Holly has covered it off anyway.

holly_hobby

Ok lets say you remortgage your own home to fund the deposit for the show home (which is a new build), and to facilitate exchange of contracts. BUT delay completion until the show home is available with vacant possession and for your occupation, which is circa 12 mths and subject to the builders agreement.

You would need a re-valuation if completion is in excess of 6 mths from survey and mge offer, with your mge offer expiring anywhere from 6 mths to 12 mths from issue (meaning that you may have to completely re-apply with new status checks etc, if the offer has expired by time of completion.

Its important to note that "porting" relates to applyng for a mge with the same lender, and is in respect to mortgage product (discount, etc) held but not the underlying mortgage borrowings (which are subject to full underwriting), and is at the lenders discrection (ie they can refuse the port request even if you meet status checks).

So this would all hinge on the builder being happy to exchange but delay completion until the property was available for your occupation (as covered above, you can't complete on a resi or BTL unless it is), and no other factors effecting securing a mge on the new build ..... but no harm in asking (if everything else stacks up).

Just to top and tail, you won't secure resi or BTL finance on the show home itself until it is ready for occupation with vacant possession - as I say in the meantime commercial finance would be the current route to do that.

Hope this helps

Holly

Wh05apk

Woolwich will do this as a btl, subject to certain restrictions (not used as office/storage, purely a show home) had a similar query from a client a while ago (the property isn't in south Essex by any chance is it?)