Have you ever tried buying a "cash-only" property with a mortgage?

Misconception

There are a few properties I like but all of them are cash-only which I presume is due to structural issues, etc. Those properties are not in demand at all.

I don't want to lose my hope but I really like those properties.

Have you tried to push on or is it completely pointless?

eddddy

There are a number of reasons why properties might be advertised as 'cash buyers only' - these include:

Non-standard construction
Above a shop / fast-food outlet / restaurant / licenced premises
Studio flat under 30 sq metres

Whilst the 'big name' lenders won't lend on these, a mortgage broker might be able to find a smaller lender. But they are likely to charge higher interest rates, only allow a low LTV, and limited multiples of salary.

AnotherJoe

It's possible they aren't really cash-only but the vendor has got fed up with sales falling through due to most lenders being unwilling and wants some certainty.

Don't forget resale. When times comes to sell odds are the reason it's cash-only won't have changed.

Davesnave

You are trying to put loads of very different eggs in one basket here, so individuals' experiences won't necessarily be even remotely helpful. Every situation will be unique.

For example, we would have struggled to get a mortgage on our property, so although it wasn't advertised as 'cash-only,' the price, the purchase time scale and legal restrictions limiting the number of potential buyers dictated that it probably was.

But how does that help you? Not a lot, I'd guess!

PasturesNew

In short: it's pointless.

Cash only is for a variety of reasons, usually because there is something VERY expensive to fix on it and often because even if you have the £20-30k to fix it it'll then be unsellable.

Mortgages are a loan against the lender's ability to sell it and get their money back if you can't pay. Cash only properties are a "problem" for some reason or other.

Cash only properties are best suited to: investors or builders with skills, who have deep pockets and knowledge to fix the problems and who know what they are doing when they buy it and have an ulterior motive for buying it (e.g. demolish it) or to rent it out as a BTL property.

In the main, cash only properties are not something you can move into and live in.

You like them because they are cheaper and you can afford them (with a mortgage) and because you are lured into how lovely they look. You imagine they are as good as other houses that are more expensive, but they are a moneypit usually.

Waterlily24

We bought a cash only house quite a while back. It was just the internal stuff that needed doing ie floorboards missing big holes in the ceilings a bit scary inside but the actual building was safe and secure.

phoebe1989seb

Our last house was cash-buyers only. A previous sale had fallen through - due to the buyers being unable to get a mortgage on it - and it had remained unsold when later auctioned. We saw it on RM the day it was relisted and drove two hundred miles to view it the following day. We decided straight away it was 'the one'.

Our own sale was progressing - four weeks in - and we weren't reliant on a mortgage for our onward purchase. Our offer was accepted and we completed within about five weeks.

It was a moneypit - Georgian, thatched, no lighting downstairs, attached outbuilding falling down - but I think the main reason it was unmortgageable was the lack of a functioning kitchen.

We had the cash to restore it - mainly DIY - and spent about £100k over three years.

Don't think I'd have wanted to take it on anyway had we been borrowing to buy it. Too risky, imho.......

Waterlily24

Ours did have a functioning kitchen but still unmortgageable(sp) the electrics were dire ie wires hanging down everywhere. Someone started to do it up but when they ran out of money and just before it was repossessed by the building society the owner just ruined the place. We did the majority of the renovations ourselves just had a bricklayer to do the extension and paid a friend to do the electrics.

Misconception

phoebe1989seb wrote: »

Our last house was cash-buyers only. A previous sale had fallen through - due to the buyers being unable to get a mortgage on it - and it had remained unsold when later auctioned. We saw it on RM the day it was relisted and drove two hundred miles to view it the following day. We decided straight away it was 'the one'.

Our own sale was progressing - four weeks in - and we weren't reliant on a mortgage for our onward purchase. Our offer was accepted and we completed within about five weeks.

It was a moneypit - Georgian, thatched, no lighting downstairs, attached outbuilding falling down - but I think the main reason it was unmortgageable was the lack of a functioning kitchen.

We had the cash to restore it - mainly DIY - and spent about £100k over three years.

Don't think I'd have wanted to take it on anyway had we been borrowing to buy it. Too risky, imho.......

How did you convience your lender to allow you to buy a property without a functioning kitchen?

Waterlily24 wrote: »

Ours did have a functioning kitchen but still unmortgageable(sp) the electrics were dire ie wires hanging down everywhere. Someone started to do it up but when they ran out of money and just before it was repossessed by the building society the owner just ruined the place. We did the majority of the renovations ourselves just had a bricklayer to do the extension and paid a friend to do the electrics.

I think some of properties on my interested list are unmortgageable for that reason. If that's the case, how did you convince your lender to allow you to fix the electrics before taking a mortgage out?

eddddy wrote: »

There are a number of reasons why properties might be advertised as 'cash buyers only' - these include:

Non-standard construction
Above a shop / fast-food outlet / restaurant / licenced premises
Studio flat under 30 sq metres

Whilst the 'big name' lenders won't lend on these, a mortgage broker might be able to find a smaller lender. But they are likely to charge higher interest rates, only allow a low LTV, and limited multiples of salary.

Thanks, I'm actually going through smaller lender as I have some benefits I can take advantage of.

I was more thinking about structural issues assuming the cost to fix them isn't prohibitively expensive (i.e. less than 25% of the property cost). The properties I'm looking at are standard properties, who have become derelict due to disuse or abuse.

eddddy

Misconception wrote: »

I was more thinking about structural issues assuming the cost to fix them isn't prohibitively expensive (i.e. less than 25% of the property cost). The properties I'm looking at are standard properties, who have become derelict due to disuse or abuse.

In that case, you could look at getting a bridging loan, until the property is mortgageable.

They're quite expensive (interest of up to 1% per month).

And if you buy without a mortgage, quite a few lenders won't let you have a mortgage until you've owned the property for 6 months.

Slinky

Misconception wrote: »

How did you convience your lender to allow you to buy a property without a functioning kitchen?

Re-read the post, she said they didn't require a mortgage.