Unsecured Loan -> BTL/Mortgage

chrisyd

Hi,

I have inherited a house a couple of years ago and we plan to move to the house in about 10 years when we get rid of the kids to Uni (I can always hope...). Until then, the plan is to rent out the property.

Anyway, the house is in need of some serious 'modernisation' and we are looking around £50k to be spent to get it to a good liveable condition.

I have spoken to a mortgage broker and also a surveyor and I can apply for a BTL mortgage but the house needs to be ready for rent before they release the funds (which I can understand).

I am thinking of a few potential solutions and would appreciate some feedback

1) Apply for an unsecure loan of around £20k over a period of 3 months just to get the minimum amount of work done where the BTL mortgage company would give the mortgage and then finish off the additional work i.e. ensuite, utility room etc
2) The fixed term mortgage has just expired on our current house (now owe approx £65k on a house that is valued around £170k). Thinking of the option to extend the mortgage on this house by £50k to pay or the work on the inherited house (I hope this makes sense).

I can understand if I go down option 2 (if it is possible at all) that I may not be able to offset the interest payment on any rent that I receive.

Our objective is not to make money (but a few quid is always a bonus) but a long term investment for when/if we move into the house and/or a nest egg for our kids.

The inherited house in it's current condition is worth approx £150k. I could sell it, but it was my family home for many years.

Thanks

dimbo61

Please speak to a good accountant about this! Who deals in rental properties!
We managed to offset both the Interest we pay on the BTL mortgage but also the Interest on the money we borrowed to refurbish the property before we first LET the property to bring it up to standard.
It would be cheaper to borrow the money for the work on your own home IF you have the equity and Income to support a larger mortgage?

dimbo61

Get a good builder in and have the work done to a time scale ( Say 8/10 weeks) An empty house earns no income and costs IE Council tax, insurance, standing charges for gas,electric,water, phone/broadband.
Consider your target market and what needs doing