Best way to get funds for property

Nadine_Mitchell

Hi I wonder if anyone can help please?

We have found a property we have fallen in love with, it needs huge renovation so is on for a good price currently.

However we need to decide the best course of action to get the funds.

We just happened to find the house so hadn't explored options before hand.

Mum has offered to help, she has 2 properties currently with only a partial mortgage on one of them. We have pretty bad credit rating so not sure we would be able to finance the whole thing without help.
Question is :
1.Do we sell one or possibly 2 of these properties to purchase the house?
2.Do we use the properties to get a secure loan for the purchase of the house and cost of renovation?
3.Do we 'remortgage' one property to get enough of a deposit to get a mortgage on the new house?

Sorry for all the sentences trying to explore all options as quickly as possible :-)

Caz3121

Nadine_Mitchell wrote: »

Mum has offered to help, she has 2 properties currently with only a partial mortgage on one of them. We have pretty bad credit rating so not sure we would be able to finance the whole thing without help.
Question is :
1.Do we sell one or possibly 2 of these properties to purchase the house?
If your mum sells the property(s) would that be enough to purchase the property and renovate with no mortgage or would you be looking to buy the new property jointly with your mum or would she be gifting or loaning you the money as a deposit for a mortgage

2.Do we use the properties to get a secure loan for the purchase of the house and cost of renovation?
That will depend on equity and your mums income. You will not be able to get a secured loan on a property you do not own

3.Do we 'remortgage' one property to get enough of a deposit to get a mortgage on the new house?
Who will 'own' the new house? will the deposit be a gift or a loan?

There are a number of considerations...are you an only child. If you have siblings how would they feel about your mum providing this assistance?
If your mum is going to gift you this then there are considerations regarding inheritance tax etc
Is your mum going to live in the property with you? (if she sells both her properties)

Lilla_D

Further to the response above, indeed there are a lot of details to go through:
- family situation (as some aspects were mentioned above)
- incomes and outgoings
- exact credit history based on credit file data
- property values, potential equity, remortgage options based on above and rental income(s)
- age of all parties and thus potential mortgage term, affordability, repayment types
- gifting/loaning arrangements and tax implications

If you need a solution fast, then your best option is to talk through the details with a broker, who can then advise you based on your full situation and the crucial financial details. Without these, any advice given here can only be generic and won't get you any closer to the solution.

P.s. "Huge renovation" is a relative term - if the property is not habitable, then it can be a different ballgame from "modernisation". The latter can still be a costly exercise even though the property is normally and technically habitable, so acceptable by most lenders for a mortgage. A broker would also take into account the state of the property and the necessary/planned works when recommending a solution.

davidwood123

Do your mum a favour and find the money yourself.