Bridging loans.

quintwins

Hello everyone,around christmas we went to see a prefect house. However before we could even put an offer in the estate agent phoned us to tell us that the seller had been in and ripped the kitchen out.At that point they were unsure what was happening. Long story short the house in now with a different estate agent and has no kitchen/wood burning stove or radiators making it unmortgageable

We really like this house and now that the bank is selling it it's dropped by £60k! We were wondering about bridging loans, if we got one and put a kitchen in could we then mortgage it? We know very little about bridging loans or if this is even possible? Also if we did manage this would the bridging loan effect our chances of getting a mortgage?

Thanks for any help you can give.

G_M

Talk to an independant mortgage adviser. However I suspet 2 options:

1) get a mortgage with a % retention - you apply for £300,000 they give you £240,000 to buy the property with a further £60K being given you once you've completed specified improvements (eg new kitchen).

You therefore only need 'bridge' the £60K

2) Borrow the full £300,000 (or whatever), do the improvements, then apply for a mortgage. Of course, there's no guarantee you'll get one, or it will be for the full amount, since the lender will only assess the application after you've already bought the property.

I imagine in your application you'd have to declare the existing loan, but the lender would (should!) take into account that you'll be using the funds to pay it off.

Way back in the good old days I raised enough on 0% credit card deals to buy a property, do it up, install a tenant, and then get a mortgage to pay off the credit cards........

Dave_the_Ginger_Cat

From what you describe, it's only the kitchen which the lender will be too bothered about, and you need only fit basic items to comply. Running water, a sink are standard, and probably means of heating water. Cooker fittings are necessary, but you don't need a cooker there at completion.

The stove may knock the value a little but presume that this a repo and it's not the sellers (the lender) but the former occupiers who have done this. From what you say of the price reduction it's priced to sell and very likely reflects this.


Where I'm going with this, is you may be able to agree it with a lender to do this on retention depending on how bad it is and how much it will cost to make it mortgageable to a basic standard.


Don't assume that a £60k drop in price means £60k of work is needed - it may have been overpriced to start with

Recommend a broker

quintwins

Dave_the_Ginger_Cat wrote: »

From what you describe, it's only the kitchen which the lender will be too bothered about, and you need only fit basic items to comply. Running water, a sink are standard, and probably means of heating water. Cooker fittings are necessary, but you don't need a cooker there at completion.

The stove may knock the value a little but presume that this a repo and it's not the sellers (the lender) but the former occupiers who have done this. From what you say of the price reduction it's priced to sell and very likely reflects this.


Where I'm going with this, is you may be able to agree it with a lender to do this on retention depending on how bad it is and how much it will cost to make it mortgageable to a basic standard.


Don't assume that a £60k drop in price means £60k of work is needed - it may have been overpriced to start with

Recommend a broker

Oh no there's most defiantly not £60k of damage, I just meant that with that drop it makes it even more attractive to us.It was very reasonably priced for what it was in the first place. We have been to see a mortgage advisor before I guess we'll head back to him and see what he says.

As far as we know all it needs is a sink to make it mortgageable. The original estate agent had told us this and that if it stayed on there books that they would be suggesting they put a kitchen sink in. The previous owner pulled it all out before the bank foreclosed on it as far as we know.

kingstreet

Don't forget, of this is a repossession, it will remain on the market until exchange of contracts.

If there's a 100% retention as I suspect if it's deemed unmortageable, you will not get an offer and will be unable to exchange, then get the work done.

If you are going to do what's needed to make it mortgageable, you may make it attractive to other potential buyers, leaving you exposed and out of pocket.

Be careful.