Bridging then mortgaging

pocket8s

Hi all

I have found myself in a lucky position and have been offered my grandparents house for less than market value

I can purchase it for £50,000 needs updating (can do most of the work myself) then should be worth 75,000 with a remortgage. Not sure of the best strategy with this.

Buy it with bridging loan - do the work asap then remortgage for 75k and let it out. Cashing in the profit to pay off some bills and put a deposit down on a house in a more desirable area for myself (renting at the mo).

Is it possible to do this without a bridging loan, wasnt sure that a mortgage company would lend 50k then come back out weeks later and hand me over 25k ish...

I have a 10% deposit i can leave on a loan or mortgage and have enough money for refurb. But nothing more.

This may be my one chance of getting on the property ladder myself and also keeping a house as an investment at the same time, so dont wanna mess it up.

Thanks in advance
p8s

IveSeenTheLight

pocket8s wrote: »

This may be my one chance of getting on the property ladder myself and also keeping a house as an investment at the same time, so dont wanna mess it up.

Thanks in advance
p8s

Not sure if you are buying a second property or your first.
You say you want to get on the property ladder and keep a house as an investment.

Either way, looking at your query you should look to try and get a BTL mortgage (given you intend to rent it out.
The mortgage company will give you 80% -85% LTV. Does this amount to more than the 75k you are looking for? If so then get the BTL to cover the refurbishment costs and then this will save you having to re-mortgage (make sure your grandparents sell it to you for the 75k even though you are only giving them 50k and puting the 25k towards refurbishing the place)

You will need an estate agent to provide a confirmation of expected rental income so make sure they are aware of your refurbishment plans

silvercar

Is it possible to do this without a bridging loan, wasnt sure that a mortgage company would lend 50k then come back out weeks later and hand me over 25k ish...

The amount they lend will be based on its current value. To get a BTL mortgage now, it is going to have to be in a condition that could be rented and the amount borrowed will be based on the potential rental value as it is now.

You can say you are buying it for 50k or that you are buying it for 75k with a 25k gifted deposit from the grandparents. What you can't say is that you are buying it for 75k, that would be fraud.

I think there are some lenders who would lend you the money in stages ie 50k now and then more as the value of the property improves; a broker could tell you which ones. Increasing the mortgage so soon after buying would not be possible with some lenders, so best to be open about your plans.

There is also the possibility of bridging and then remortgaging. The experts at this are on singingpig.co.uk (BMV board). AFAIK, Mortgage Express are the best at allowing immediate remortgages.