Can anyone recommend a lender for building loans? (Buying and renovating a uninhabitable property).

GDunnett

Good morning,

I'm currently looking at buying a building in my village which has never been used as a residential property. It is my intention to turn it into a residential property.

We're still getting quotes for the building work, but have had a rough estimate of £50k to do the work on top of the £50k to buy the property.

It has electricity, but no kitchen, bathroom or water (but has access).

I spoke to someone in mortgages at Santander and they said that I wouldn't be able to get a mortgage on the property right now because it's currently 'uninhabitable'. They said I would therefore need to get a building loan, do the work to the point where it was habitable and then I could be approved for a mortgage.

I was just wondering if anyone had any recommendations for who I should contact for this building loan? I've Googled and contacted a few already, just waiting to hear back, but in the meantime I thought I'd ask here. Any suggestions would be appreciated.

Thanks!

AdrianC

Can you afford to purchase without the loan? £50k to do all the work, but how much to meet the "habitable" requirements? Kitchen and bathroom for that can be very rough and ready - 3x2, ply and the cheapest, nastiest sinks you can find.

Perhaps most importantly, do you know the likelihood of PP for change of use...? Does the village have an NDP in place, approved? If so, it might be worth having an informal conversation with the parish council, see what their take on it is. While their word isn't gospel, it certainly influences the local authority in their decision, if there is an NDP in place.

GDunnett

In regards to your first question, no, unfortunately I can't afford that. I only have £18k saved myself. I do know the owner of the property really well, so we did consider asking him if I could do the work necessary to meet the 'habitable' requirements, get the mortgage approved and then buy it from them, but there is the risk of me doing this work using my own money and then not getting approved for the mortgage for whatever reason (meaning I would effectively be doing up someone else's property). I'm just not prepared to risk that hence why I'm wanting the building loan to buy the property and do the work all in one.

Planning permission has already been approved.

Sorry for not knowing, but what is an NDP?

AdrianC

GDunnett wrote: »

Sorry for not knowing, but what is an NDP?

Neighbourhood Development Plan.

But if change of use has already been granted, then job jobbed.

ACG

It would be a bridging loan you need.

GDunnett

Ah, thanks!

I'm a first time buyer and am learning about this as I go along, so just knowing what terms to search for has been part of the battle.

Are there any reputable lenders that you could recommend for such a loan?

ACG

Most of them are only available via mortgage brokers/commercial mortgage brokers.

With you being a first time buyer and needing help with the terminology I would recommend the use of one. Bridging loans in the main is an unregulated part of the market, that means if it goes wrong you have no come backs unless you have the money to go through court. There are no consumer rights and no financial ombudsman, you will be treated as a professional.

Hiring people to work with you costs, but that cost reduces your risk and actually may even save you money.

GDunnett

Thanks - that's very helpful.

pinklady21

You could try a self build mortgage, where the cash is released in stages? No idea how much of a deposit you might need. If you google Self Build Mortgage, a number of contacts will appear. Best of luck.

GDunnett

Thanks for the suggestion. I'll look into that as well!

kingstreet

ACG wrote: »

It would be a bridging loan you need.

BuildStore?