Mortgage for auction property; house and flat.

Kaz2904

I have seen a property which I love . It is for auction on 22nd July. Guide price £365000. DH and I have no money- well, perhaps £9000 floating around in ISAs- I would need to double check. We have a car loan which will be cleared by 9th July or August. I also have a credit card (0% for 23 months which I will be paying £1971 on tomorrow for a motorbike. £3700 limit).
We own our current house outright having paid of our mortgage 2 years ago. It is worth around £180000.
The auction lot needs total renovation.
My plan would be; Buy at auction. Renovate garden flat and move us and kids into that. Rent out our 3 bed home. Use the money coming in from that towards renovation costs for the house. Get it habitable and move upstairs. Rent out garden flat.
So we would have our current house rented out and the garden flat rented out. DH and I living in big house and paying (scary) mortgage.
What type of mortgage would we need to apply for? It would be partially BTL.


I'm very confused and don't even know if this is a viable option, we are well aware that this is a big leap from no mortgage to a massive mortgage but it would pay off with us owning 3 properties outright.


The house will be a lot of work to get up together but looks watertight and we can do the majority of the work ourselves which saves money. It is big enough that we can move into it if we run out of money and need to rent out the garden flat. We would still be able to renovate room by room and it wouldn't be anything like as hard as when we did our house last time!


TIA for your responses- even if it is only to tell us that nobody on this earth will touch us!

ACG

You could raise a BTL against your current home.
That would give you £135k (75%).

The rest I suppose would need to be a residential as your not letting it out, your living in part and renovating the rest.

Bit of a complicated one this, I think you should book an appointment with an experienced broker and go through everything in a bit more detail.

blackshirtuk

Run!!!

Seriously the £365K will probably end up at £400k but your problem will be getting the mortgage.

You will need to release equity from your present home and the use that as deposit on the auction property. The lender will then look very closely at your spending habits/income. If it is not habitable at the moment you will not get a residential mortgage. You would need a development mortgage (rates a lot higher)

All this needs to be sorted out prior to the auction, please do not bid unless the finances are sorted or you could put yourself in serious trouble. You could end up losing your present house as well as the potential purchase.

Kaz2904

Don't worry, we wouldn't bid if we didn't have finances in place!
The property is habitable as far as we can tell from the photos and having gone and had a peer around. Just not plush or decorated IYSWIM?

stephenni1971

There are huge risks to what you want to do.

When the hammer falls, you are in a legal contract to buy the property - there is no backing off.

Thrugelmir

Unless you sell your existing property. How will you fund the purchase. As you've no next to no savings.

If you wish to undertake such a dream. Long term planning is the key.

Kaz2904

That's the thing, the new purchase would be funded by mortgage and then the renovations would be funded from wages.

mrginge

Kaz2904 wrote: »

That's the thing, the new purchase would be funded by mortgage and then the renovations would be funded from wages.

Where is the deposit coming from?

anselld

It is theoretically possible ...
if you remortgage your existing property, and
mortgage the auction property ( if it is habitable and mortgageable), and
your incomes/ affordability support both mortgages, and
you can complete both mortgages within the auction timescale (usually 20 working days)

A lot of "if"s and a lot of potential to go badly wrong.

maninthestreet

Why do you need another property when you already have two??

ACG

Does it matter?
Why do people have 2 bathrooms in their homes or 2 of anything?

They want it, they can afford it.