Seling vs keeping, mortgage vs remortgage vs auction, etc

Proactivation

The back-story:
I bought a house in 2009 which needed some TLC, and since then I've done a lot of work on it. Work was good and I saved up enough to see me through for a good 6 months if that changed. Last year that changed, and I'm now in month 8 of no work. I'm not on benefits but the cash has now run out. The only thing I have of value is my house, and I'd like to use its value as a springboard into property development.

The numbers:

• House bought (mortgaged) in 2009 for 340k
• Amount left on mortgage: 275k
• Last bank valuation for mortgage purposes: 500k (2012)
• Last estate agent valuations for sale: 650-750k (2015)
• ERP on mortgage fixed until 2018: 8.3k before 01/16, 5.3k before 01/17

The options:

1. Sell the house, buy a cheaper house nearby in need of a refurb by transferring the mortgage, use the profit to pay for mortgage payments, refurb costs and subsistence
2. Sell the house, buy a much cheaper house further away with a transferred mortgage, buy a 2nd house with the profits (open market or auction)
3. Sell the house and pay off the mortgage, buy a cheaper house, live mortgage-free, use the remainder to invest a property
4. Keep the house, re-mortgage (for potentially a lot less than the open market value), and use the equity for property development
5. Keep the house, get a mortgage on a 2nd house
6. Other?

The viability:

1. Developing a property that I'm also living in is less than ideal. People who've done it say they'd never do it again.
2. Will there be enough to maintain 2 houses plus all the costs until the 2nd property is ready for resale?
3. Realistically, there'd only be enough for 1 house, so (1) still applies. Pros: no need to worry about maintaining mortgage and interest payments, reducing the time pressure and worries about interest rate rises. Cons: property is likely to appreciate in value at a higher rate than the current pathetic savings interest rates, so may be better off with the mortgage.
4. The re-mortgage would be based on the bank's valuation which is likely to be considerably less than the open market value. This severely restricts the options going forwards. If asked to prove an income high enough to afford the new payments, I'll come unstuck. Not sure they'd be happy with me paying the mortgage with the funds they give me from the re-mortgage! Could be wrong, but not sure about admitting that plan to the bank.
5. Not really an option. My bank has a blanket rule of a 25% deposit on 2nd mortgages (which I don't have), and I'd fail affordability criteria with no income

Please help... all the combinations of 1 or 2 houses, mortgages, re-mortgages, buying/selling costs and timings, etc. are making my head spin. Add in issues such as should I apply for a mortgage payment holiday and/or benefits and how will those affect my options, time constraints given my limited funds, and it's a bit overwhelming right now. But it's either this or lose the house.

eddddy

Without an income, realistically, no lender will re-mortgage your current house or give you a mortgage on another house. I doubt your lender would even let you transfer your current mortgage to another property.

There are some companies that offer development finance, but typically not to first timers.

So you may need to rely on the net cash you get from selling your current house.

It's quite difficult to make 'real' money out of refurbing property at the moment - especially in the South East. For example, putting in a new kitchen, new bathroom, new laminate flooring and redecorating probably wouldn't generate an income you could live on.

Professional developers tend to look for property to convert, extend or structurally repair - in order to get a decent return.