defective rtb council house- no mortgage maybe a bank loan?

bestyman

Hi all,
Any suggestions please.
We have applied for right to buy council house but are having problems getting a mortgage.
Council valuation 45k
Actual value after improvements we have already made , at least 60k
Price we need to pay after discount 31k.


The problem is that the house is made of concrete. Its called WATE construction. This means that the house is defective, it is possible to rectify this by building an extra wall around the outside of the house and the cost of this is 20k. Whilst the council have informed us of the defects the house is in no way falling down. Some on the estate have been done but none in our street have. The council have no plans in the foreseeable future to carry out the work so in no way is it urgent. Houses with the work done are worth 85-90k.

Simple maths show that although the house is defective it is still a bargain and we don`t mind buying it as even if the work had to be done we would have 50k invested in a house worth 90k. ( 30k invested in house worth 65 without)

Our first try was HSBC who were not sure if they would lend but if we paid for a survey they would let us know. NO thanks.

We then went to an independant who tried most mainstream lenders ( inc abby and halifax) and he found a company ( who I had never heard of ) who would offer a mortgage at 9%. Yes thats a nine. Not too pleased with that so then I have an idea, why not get a bank loan? Tesco finance and A and L do rates of about 7% which while still higher than a normal mortgage is better than the 9% offered.

All loans we have found are only up to 25k so we would have to raise another 6 from somewhere , any ideas?

Will the banks let us use a personal loan for a house?

Please will someone tell me if I am missing something. I cannot see how we could possibly lose out, surely a 2 bed semi will always be worth 30k? Its not gonna fall down overnight, there are hundred of them around her all occupied and its not this particular house that is defective its the construction type and I feel the council informed us of this to `play it safe`.

Even a personal loan would be £330 over 10 years and we are paying £200 a month rent now. I see this as £130 a month over 10 years is £15,600 which is in effect the extra we will pay to own the property ( less rent).

Years from now when it comes to selling we could have the property repaired ( if not already done by now) or rent it out for £450 a month ( at todays money) to offset the cost of our new mortgage on our next house.

So, any ideas on raising money to buy. Have I missed anything?

Just one more thing, when appling for a loan a question is "are you a homeowner , yes or no " . The real answer is "well no not now , but will be this time next week if I get this loan". Is there any way round this?

Thanks for any replies.

Paul

thaylock

I think Birmingham MidShires will loan on this type of house, they should give you a mortgage for the amount you need on condition you get the house rebricked. I own one of these so called 'defective' houses, luckily I was able to pay cash, but there are mortgage providers who will give a mortgage on this type of house. Don't go for a personal loan, try asking a mortgage broker.

thaylock

Carry out a UK google search on 'right to buy mortgage'

thaylock

Look at http://www.cus4righttobuy.co.uk (Regency), though I would expect these sort of companies to charge a premium for their services.

bestyman

Thanks for the reply, I will try Birmingham midshires.
I looked at regency and your right, they want £1,950 for an arrangement fee, think I will pass on that one.
So did you get your house bricked up then or is it still concrete?
Thanks

thaylock

It is still concrete (I purchased the house about 15 years ago), I will get it rebricked when I sell the house (so potential buyers won't have a problem getting a mortgage), but I have no plans to sell it yet.

mdean

My experience may help. Im 2000 I bought a system built ex local authority property - and I live very happily in it today. Mine is a Levitt Cartwright and Leeds built a few thousand I think in the 50's/60s.

I have since found out that each local authority had their own pet system - some good - some bad. This report http://www.cml.org.uk/servlet/dycon/zt-cml/cml/live/en/cml/pdf_pub_misc_NontradhousingBR.pdf gives an understandable review of the issues. So I don't really know about the system in your area - but I bet the local estate agents do. If you owned the house could they sell it. Do they know lenders who will lend on it.

In my case Nationwide were a bit sniffy only lending on 75% which was ok for me, and sending round a feckwit surveyor who did not understand how the construction worked.

Later I remortgaged to the Abbey and was required to have the metal stantions repaired at a cost of £3k but once done they were happy to lend.

good luck

bestyman

Thanks Mdean.
Are you in Leeds?
We live in Leeds and here on this type of house it`s not looking good. Like you say most people that you talk to have little or no idea. So far ( more ideas welcome please) we have 3 options.
1. try raise 30k on personal loans etc and buy as is.
2. mortgage with some company I never heard of at 9.5% ( don`t think so )
3. Halifax may do a mortgage if we have the house repaired and may lend us the 50k needed. Just looking into this option.
4. Will try Nationwide now that we know they may be interested.

Thanks

jaxprescott

I've been told by my mortgage advisor that the Halifax will only lend on houses that have been slabbed - however, the estate agent assures me that building societies will lend on them and the specialist surveying firm says that it's worry about the decay of the steel frame that concerns building societies. This specifically applies to Levitt Cartwright construction which my house is. I'd be interested to know if anyone else has heard the term or the need for 'slabbing' on these houses specifically?

jaxprescott

I tried to follow your link to the council of mortgage lenders report but the page wasn't there. ANy clues to where you found it?

helen_vasey

Is the house concrete with steel cladding on the top half? I ask because my sister sold one of these last year and her buyer had no problem getting a mortgage, in fact the surveyor said that they are better built and will last longer than many new builds around at the moment.