Can anyone advise how to get a home improvement loan with bad credit?

PJVW

I have been given half ownership of a derelict semi-detached house currently worth £150k in a very nice area. The owner is a relative who is too elderly and poor to renovate it so they have given my wife and I half ownership in exchange for extending and modernising it and then renting it out, splitting the rental income 50/50. There is no mortgage or loan on the property and when finished it will be 4 bed, value will be £230k with a rental value of £900pcm. Total cost of doing the work will be £65k.

The issue is that 5 years ago we entered a DMP (Debt Management Plan) and we have 1 year and £11k left to pay off so I would appreciate some advice on who would lend us the money to pay off the DMP and renovate the property?

My wife and I are both self-employed and household income is around £80k gross, so we would need to borrow £50k over 6 years in total.

prosaver

PJVW wrote: »

I have been given half ownership of a derelict semi-detached house currently worth £150k in a very nice area. The owner is a relative who is too elderly and poor to renovate it so they have given my wife and I half ownership in exchange for extending and modernising it and then renting it out, splitting the rental income 50/50. There is no mortgage or loan on the property and when finished it will be 4 bed, value will be £230k with a rental value of £900pcm. Total cost of doing the work will be £65k.

The issue is that 5 years ago we entered a DMP (Debt Management Plan) and we have 1 year and £11k left to pay off so I would appreciate some advice on who would lend us the money to pay off the DMP and renovate the property?

My wife and I are both self-employed and household income is around £80k gross, so we would need to borrow £50k over 6 years in total.

whos gonna pay 900 a month rent, its cheaper to stay in a hotel,with room service (more champagne please)

vlad

prosaver wrote: »

whos gonna pay 900 a month rent, its cheaper to stay in a hotel,with room service (more champagne please)

That would be cheap for a 4 bed house in the s.east !
OP you're only chance of borrowing that sort of money as far as I can see would be a mortgage secured on the property. Nobody is going to lend you 65k whilst on a DMP.

DCFC79

Cave up the money to do the works.

All depends what's on your credit history, you say bad but how bad ?

Oh and disregard your score as its irellevant.

I take it you have looked what's available locally and based the 900pcm on that ?

20aday

And not only that one of the terms of your DMP is that you don't obtain any form of new credit.

I agree with DCFC-save up the money to complete the renovation work.

DCFC79

Must have missed the part about your dmp, that's a dead cert to turn lenders off from lending to you, don't know if a secured mortgage would work but then how much spare cash do you have each month ?

PJVW

DCFC79 wrote: »

Cave up the money to do the works.

All depends what's on your credit history, you say bad but how bad ?

Oh and disregard your score as its irellevant.

I take it you have looked what's available locally and based the 900pcm on that ?

Yes, a local estate agent has done the valuations and also given us a minimum rental valuation of £900pcm.

Credit history was excellent, but multiple changes in circumstances caused us to have to enter a DMP in 2010. Our main house is valued at £580k with a mortgage of £220k and we've never missed a mortgage payment, utility bill or council tax payment, just had to add loans and credit cards to a DMP and now that is the only debt we have along with the mortgage.

Plan is to use the new loan to pay off the DMP and start the building work. Paying off the DMP frees up £635/pcm which will easily pay the repayments for a loan plus our income will cover the bills from the builder.

Thanks to everyone for the advice and I would love to save up the money, but as the house has been derelict for about 4 years the neighbours (it's a nice area) are very unhappy and my elderly relative has been forced by the council to do something which is why he has given me and my wife half ownership plus the council tax goes up to 150% as it has been unoccupied for 2 years next month. My elderly relative cannot pay the council tax at the present level, never mind at 150% of the current charge!

What I am looking for is some suggestions for brokers who will listen to the situation and provide a secured loan on the property over 6 years. Everyone I've found online has their fair share of horror stories regarding charges etc. so any recommendations would be great, thanks.

Thomas_The_Tank_Top

PJVW wrote: »

Our main house is valued at £580k with a mortgage of £220k and we've never missed a mortgage payment, utility bill or council tax payment, just had to add loans and credit cards to a DMP and now that is the only debt we have along with the mortgage.

The only reason you didn't miss a mortgage paymet (goodbye house), Utility Bill (goodbye leccy, gas) or Council Tax (hello prison, or BR), is because you did not pay anyone else. That's how the money lenders would see it too, if they have any sense.

According to your OP, you and the other half are pulling in 80k per annum. So what is your saving problem?

Clive_Woody

PJVW wrote: »

Yes, a local estate agent has done the valuations and also given us a minimum rental valuation of £900pcm.

Credit history was excellent, but multiple changes in circumstances caused us to have to enter a DMP in 2010. Our main house is valued at £580k with a mortgage of £220k and we've never missed a mortgage payment, utility bill or council tax payment, just had to add loans and credit cards to a DMP and now that is the only debt we have along with the mortgage.

Plan is to use the new loan to pay off the DMP and start the building work. Paying off the DMP frees up £635/pcm which will easily pay the repayments for a loan plus our income will cover the bills from the builder.

Thanks to everyone for the advice and I would love to save up the money, but as the house has been derelict for about 4 years the neighbours (it's a nice area) are very unhappy and my elderly relative has been forced by the council to do something which is why he has given me and my wife half ownership plus the council tax goes up to 150% as it has been unoccupied for 2 years next month. My elderly relative cannot pay the council tax at the present level, never mind at 150% of the current charge!

What I am looking for is some suggestions for brokers who will listen to the situation and provide a secured loan on the property over 6 years. Everyone I've found online has their fair share of horror stories regarding charges etc. so any recommendations would be great, thanks.

To be honest if you are on a DMP then securing any source of funding seems quite unlikely.

Rather than trying to secure funding for the full renovation could you split it into steps (i.e. make it weather proof first, then start on the interior) and do as much of it yourself as possible?

The only other alternative I see is selling the property to a builder/developer who has got the funds to do the place up. You may be able to get a good price selling it based on current value + potential income/vale once it is done up.

fruitisbad

Relative to take out loan in his name secured on teh value of the house.

PJVW

Thomas_The_Tank_Top wrote: »

The only reason you didn't miss a mortgage paymet (goodbye house), Utility Bill (goodbye leccy, gas) or Council Tax (hello prison, or BR), is because you did not pay anyone else. That's how the money lenders would see it too, if they have any sense.

According to your OP, you and the other half are pulling in 80k per annum. So what is your saving problem?

£80k pa is gross not net and disposable income pcm is around £900. We managed to save up £30k over the past 3 years, but we have had to have major work done on our main house which has cost £27,500.

I looked into selling, but the elderly relative won't agree to that and I see this as a pension and something to pass down to the children.

Looking at all of the helpful replies I think that I have to pay off the DMP as the only way forward.