Business opportunity - self cert?

matty_hunt

Hi. I need a quick bit of advice please.

A chap I know has asked me to come into a business venture with him. Its to buy a farm with outbuildings to develope. Im unclear as to how to raise the money for this project. Its £500,000 so he suggests we get a self cert morgage for £450,000 then register each barn as a seperate property and then take additional self cert mortgage on one of these barns to raise the money to pay the original mortgage monthly payments and fund the renovations.

Is this possible? How do self certs work?

I know nothing about self cert or funding for development. my concern is that I only earn £23000 and have a mortgage of my own already.

Any advise welcomed. Thanks

toonfish

you could buy the farm on a self cert basis as a residential property, but you would need to be declaring income of arouns £100,000 combined, after taking account of your existing outgoings.

You would then need development finance to renovate the barns - it is possible but much depends on the projected end values, costs of the work, saleability and whether planning permision is in place.

You really bneed to use a broker for this one I think, and bear in mind that you are looking at an outlay of perhaps £3000 per month just to service the borrowing

Rick62

This sounds like a disaster. Lets say you raise the money to buy the place (and it sounds like you would be lying if you went self-cert). Is the deed not going to be for the whole property? In which case the first lender is not going to release the outbuildings to another lender.

The reality is you would need the resources to pay the mortgage (about £2500/mth) and pay for the works. Unless you can bring in another sleeping partner who has the financial resources?

matty_hunt

Thanks for your input guys. I didnt think it was as straight forward as this chap implied. Even if we could go forward, the slightest hic-up or delay would cost us so much it would be the end for me!
cheers

herbiesjp

If you are on £23k and already have your own debts, I cannot see how this would work. Self cert is not the answer, as you have your own income stream of £23k and by the sound of your posts, it does not look like to have access to other income streams to support the use of a self cert mortgage.

That's just the self cert front.

As Rick62 rightly says, you will then start to have problems will the farm and outbuildings if you are then hoping to raise further funds from these!

MortgageMamma

Definitely a no-goer. Why dont you try something similar but on a smaller scale first to see if its workable. Taking on a project that size as a first time property developer would be too much for you.