Want to borrow to renovate house before selling, no income...

pharmakopoeia

I'm looking into getting a loan as I inherited a property that was being rented out, which I'm planning to move into to renovate and then sell within 12-16 months of moving in.

However, this will mean both leaving my job and losing the rental income. I've no savings. Therefore I will need some money both to do the renovations and to live on in the meantime.

The amount I'm looking at borrowing is £15 - 20 K.

I've looked at building societies and what they are willing to loan you seems to be determined by your monthly income.

If anyone has any ideas about the ways to go about this, I'd be most grateful to hear them.

Tixy

With no income you will find it very difficult to get accepted for a loan.

How are you going to afford monthly repayments on your loan? A loan of £15k over a 5 year term even if you were accepted at a fairly low APR of 8% would mean repayments in excess of £300 a month.

I think you might need to rethink your plans, any lender for a loan or credit card will carry out affordability checks to assess how you will afford repayments.

Thrugelmir

Why not move in and keep your job ?

pharmakopoeia

In that case then surely a standard bank loan would do it? I don't currently have no income, just will do once I move in. So my bank balance looks healthy at the moment.

pharmakopoeia

Thrugelmir wrote: »

Why not move in and keep your job ?

150 miles apart!

Caz3121

Aside from the fact that getting the funding may be a challenge, have you worked out whether this is worthwhile


example
if current value of property for quick sale = £150k
Cost of renovation - £20k
new value of property - £190k
might look like you have a gain or £20k less interest, fees etc

but then factor in loss of income - £30k
would mean you would be better selling the property as it is

Whether you would qualify for a standard bank loan now whilst in employment would depend on your current income, current debts and credit history

27col

Far better to sell the house for what you can get now, and avoid all the hassle and having to find employment when the sale is done.
You seem surprised that what the BS is prepared to lend, is based on your income. Why would anyone lend to someone who has no income and is unlikely to be able to pay it back.
Your plan is seriously flawed and if you think it though, you will realise why this is the case.

Lioness_Twinkletoes

pharmakopoeia wrote: »

In that case then surely a standard bank loan would do it? I don't currently have no income, just will do once I move in. So my bank balance looks healthy at the moment.

How do you intend making the repayments once you have no income?

pharmakopoeia

Thanks for the input.

Caz:

You made an erroneous assumption as to my income. Not that much! Also, savings on rent, benefits of stable base for getting new business off the ground etc...

27col:

Not intending to stay in that job anyway.

Seems to me that if one has a property as collateral then that would be a safe bet for a lender?

Lioness:

Take out £12K, to be paid back over 5 years; monthly repayment ~£225. After selling the house, I will be able to put aside some of that money to pay off the rest of the loan. Or if I can get a loan with Zopa, pay it all off then.

BillJones

It sounds like you have everything sorted out, then, and that you definitely don't want to take on board any advice from here. All you need now is a lender with absolutely no commercial sense, and you are good to go.

Lioness_Twinkletoes

pharmakopoeia wrote: »

Thanks for the input.

Caz:

You made an erroneous assumption as to my income. Not that much! Also, savings on rent, benefits of stable base for getting new business off the ground etc...

27col:

Not intending to stay in that job anyway.

Seems to me that if one has a property as collateral then that would be a safe bet for a lender?

Lioness:

Take out £12K, to be paid back over 5 years; monthly repayment ~£225. After selling the house, I will be able to put aside some of that money to pay off the rest of the loan. Or if I can get a loan with Zopa, pay it all off then.

So you're intending to use the loan to pay off the loan until you sell the house?