What challenges will I face financing this?

htrj

A close family member owns a house that they want to sell. They are in the autumn of their life and they dont need a huge amount of money to do what they want to do next but they do want to off load their home which also happens to be their business.

The house is probably worth 1m. During the week It operates as something short of a BandB for contractors at local businesses, lets call it an Airbnb for arguments sake. Those guests leave on a Friday morning and then the house is let at weekends as a holiday let to tourists, only for the weekday guests to return on a Monday evening. There are two further buildings which are not on the title deed which are also used as let accommodation. The rental income from this enterprise is about 50k per year.

I am self employed and have been for a little over three years. 1st years accounts were poor. 2nd year about 20k. Last year a little over 30k. I only have about 10k managed debt and could clear that now if I wanted to, doesnt seem much point though as its just 0% CC's.

On top of this I can demonstrate that I have already put 50k of my own cash into their house. Im sure I have put much more than that in over the years to help them through some tough times but there's no way I can prove it. Same story with the amount of time ive put into it. Anyway, that is more or less the deal. The owner knows what ive put in and the are gracious enough to let me have the house for half of its market value. Say 500K.

So, what are my chances of getting an offer, what sort of rates would you expect to be offered and before I sign up to a bad offer what would you call to be a "good" deal.

Looking forward to hearing from you.

csgohan4

whats your deposit?

you can usually only borrow x4.5 of your gross income which looks to be far short of the 500k figure.

Unless your deposit is a few hundred Grand, its a likely no go. Spending 50k on the house will not help in getting your offer. Lenders actually don't care and you won't get your money back likely.

[Deleted User]

What are you planning to do with the house? Live in it? Or keep it as B&B?

htrj

Keep operating it in the way it is run now alongside my own business and I would live in it.

[Deleted User]

If that's the case then you will be looking at commercial lending I think (more than 40% kf the property used for business purposes)

I don't do commercial lending but the company I refer them to pays me very well for thr business so if assume the lending is quite expensive

LRmortgage

You would struggle to get a residential mortgage on it.

Might be worth a chat with a commercial mortgage broker. I have no idea if the numbers stack up though.

enthusiasticsaver

You will need a commercial mortgage and a business plan. High deposit probably and relatively high interest rate. On your income no way will they give you £500k. How on earth would you service a mortgage of that size on an income of around £50k assuming you carry on letting it out? I think this is a non starter.