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

bigadaj

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.

No one is going to lend you money with no income. Not only is it. Bad commercial risk, even with a Large amount of equity, they would be hammered by the regulators for irresponsible lending.

The whole thing sounds like a disaster waiting to happen, but it's your life.

If you earn a decent amount then you could theoretically get a loan whilst you're working, but you'd probably have to lie about its purpose, which is technically fraud.

silverwhistle

Why not continue to rent it out for a bit and start saving some capital? Alternatively take a couple of weeks annual leave and spend the time on the property making it at least neat and tidy to get the best price for it?


"Getting new business off the ground" - so no guaranteed income then and the possibility of business failure, which is very common for new businesses.
It all sounds very flaky and too many things to go wrong.

Final idea: find a job in the same area as the house and then start doing it up evenings, weekends and holidays. Save the rent you'd have paid and do the place up bit by bit...

PasturesNew

Why not move into it ... take the first/any job close to the house .... then get a loan?

pharmakopoeia

Lioness_Twinkletoes wrote: »

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

This is indeed so. Am I right in saying that people here find this notion totally barmy?

pharmakopoeia

BillJones wrote: »

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.

Again, incorrect assumption. Hope you don't spend your whole life doing that. But thanks for your concern!

BillJones

pharmakopoeia wrote: »

Again, incorrect assumption. Hope you don't spend your whole life doing that. But thanks for your concern!

Of course it's not an incorrect assumption. The only people who'd lend to you on the basis you propose would be idiots or leg breakers.

As for your patronizing comments about how I live my life, I'm not the one scrabbling around on the internet trying to secure a loan that will never come, on a low wage!

antrobus

pharmakopoeia wrote: »

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.
....

Perhaps I should ask the unasked obvious question; what experience do you have of property development? Since spending 12-16 months on a 'renovation' sounds like rather a lot of renovation.

Thrugelmir

pharmakopoeia wrote: »

This is indeed so. Am I right in saying that people here find this notion totally barmy?

Let's just say it's not an idea that lenders will entertain. People's ideas often fail to meet commercial criteria.

pharmakopoeia

Ok thanks for helping me to understand the mentality of lenders, I will be getting a McJob when I move!

AlexMac

It might be worth considering some of the alternative approaches suggested above; 12 months does sound a long time to be working full-time on a renovation, and it implies you're either an inexperienced or not-yet-confident DIY-er? The £15k-ish budget implies you are talking new bathroom/kitchen/redecoration, rather than major items like new roof, structural beams, rear/side extension, glass walls etc? (buy 'Homebuilding & Renovating' magazine for ideas & tips and visit their shows- or subscribe cheap at https://www.homebuilding.co.uk )

Learn how to plan, budget and forecast cashflow- for the planned year without income; do a spreadsheet or even written notes covering cost of:
- your own living/eating/going out/travel while on the job(£6k pa min ?),
- utilities (Council tax, power, water; £2-3k pa),
- building tools, equipment hire & materials,
- trades you have to buy in (esp. electricians & plumbers to ensure the certificates essential when you sell on - these will be required by any buyer's solicitor),
- costs to carpet, furnish and 'dress' the house for sale
- legal and agency fees to sell (although these will come out of sale proceeds)
- lost 'opportunity costs'; the rent you'd earn if you toshed it over and rented it out; (£6k+ pa?), interest on capital in the bank if you sold (£2k?).

I assume you already know the market in the area and have already got 2-3 estate agents in to value the property as is, and give you an estimate based on condition once improved? That way you can compare cost and benefit If the difference isn't at least £30k - better to sell as is, as someone above says! The DIY-developer TV programmes are littered with people who wasted money or wasted a year of their life and lost money! This is especially true if the house is in a low-cost area or one where price trends are flat; where it's hard to add value. There tends to be a ceiling price; check Zoopla values & price trends for the street and postcode. Although you could argue that this is a reasonable way and cost to acquire new skills if you are really just fed up with your current job and geographic location?

An alternative might be to get a couple of local builders in to give a price for a quick, minimal make-over; they can probably do in a month what would take you 9m-1 year and if this means you can sell or rent then you get your money much faster.

Anyway; lucky to have a house- but do the numbers before saddling yourself with a loan or mortgage, or worse still- a lot of effort and a loss!