Getting a mortgage for uninhabitable property with no work or credit history?

monetxchange

I appreciate you can't see any other properties you want now, but I'm sure more will come up over the years. Unfortunately you have no proven income record, credit history, not a massive deposit - you have to see that lenders who are taking on the risk of this need to be able to see you can afford it, to which there is no proof at the moment. 

Your best option is to knuckle down and save save save. I lived in a situation I really didn't enjoy for over three years to get into a position where I'd saved up a big deposit and moving expenses etc so I could cover my back as my own situation (self employed) isn't exactly top of the lenders lists either. You can get the savings built up quickly if you're frugal like you say.

chilswelluk

monetxchange said:

Unfortunately you have no proven income record, credit history, not a massive deposit - you have to see that lenders who are taking on the risk of this need to be able to see you can afford it, to which there is no proof at the moment. 

I agree with most of the things you have stated, but what do you call a large deposit if someone only wants to borrow 70k?  I only want to borrow 70k and already have 30k to put down.  I think that's quite a large deposit to money borrowed ratio (considering many people only have 5% deposit), but then I know nothing about borrowing money.

ACG

Unsecured loans as far as I am aware are limited to around £25-30k in the main. 

It might be worth looking at some of the self build lenders, ecology building society/newcastle - It is not my speciality so I am not much help, but with a 30% deposit, they may allow you to purchase a renovation project? (In my mind) I can see much difference between a plot of land and a shell, but there will be more experienced brokers in that field who can confirm if there is a difference or not. 

Anamox

It may be best to try arranging some meetings with a few mortgage advisers (they're often free for the advice stage) and talking them through some numbers and particulars of the property, they may be able to give you some ideas that might not have occurred to you already. About 10 years ago a great uncle wanted to buy an uninhabitable place in Spain to do up, but his problem was he'd essentially couch surfed and worked at sea for 40 years without any real traceability in the UK. He had around 60k cash for the property which was up for around 200k back then. We thought he had no chance and it was just a crazy plan like he'd always had but he eventually found a specialist broker who helped him get the finance in place to purchase it... fast forwards to now and it is still an uninhabitable sh*t-tip but he is happy regardless! 

Failing being able to purchase the property now, is there any chance you can contact the seller and rent the land? They may be struggling to sell it and eager to get some cash flow in. Then potentially as you build up your employment record and start getting a bit of credit history you may either find a way to purchase it or find another property which you can afford after saving more.

Good luck with it anyway, I wish you the best and hope you find a way to get it.

davidmcn

chilswelluk said:

monetxchange said:

Unfortunately you have no proven income record, credit history, not a massive deposit - you have to see that lenders who are taking on the risk of this need to be able to see you can afford it, to which there is no proof at the moment. 

(considering many people only have 5% deposit)

Not "many" at the moment.

monetxchange

chilswelluk said:

monetxchange said:

Unfortunately you have no proven income record, credit history, not a massive deposit - you have to see that lenders who are taking on the risk of this need to be able to see you can afford it, to which there is no proof at the moment. 

I agree with most of the things you have stated, but what do you call a large deposit if someone only wants to borrow 70k?  I only want to borrow 70k and already have 30k to put down.  I think that's quite a large deposit to money borrowed ratio (considering many people only have 5% deposit), but then I know nothing about borrowing money.

No criticism of you at all - just how I'm seeing the market is at the moment. Like others have said, the days of 5 or 10% deposits are becoming rare even with fully employed people with credit histories on nice investment for the lender properties. I'm not sure how much they'd want from you, but I'm being asked for £52k to get a £200k mortgage just because I'm self employed (highish income and perfect credit too). It's hard work out there in the easiest of cases. Like others have said, the deposit might be moot as perhaps no one would take the risk and you'd need to be a full cash buyer.

yksi

What you're going to realise is that your unique combination is a VERY BIG risk for a bank. Think about it in an impersonal way because sadly they don't care about "why", even though you're a good person, they care about how things are. The guy's been out of work for ages, the property is uninhabitable, he hasn't even started his job yet and might be on probation. Hasn't got a partner in the mortgage to halve the unemployment risk, credit history hasn't really got any proof that he can handle money and debts. If he got fired or quit, and he couldn't keep up with repayments, the bank has no income for months, then the bank can't get him evicted, Covid could go even more pear-shaped so they can't take possession and auction the property, the market tanks into the toilet until it's only worth 50k, they lose their money, sad faces at the weekly bank meeting.

Then you have the seller. The seller might well decline your offer the moment you say that you'll be trying to get a mortgage on it. They already know you won't get one and don't want their time wasted because it might mean they lose a sale to someone else with cash waiting.

Now isn't a time where you can "positive think" -your way into breaking all the rules of What Banks Want.

I know it's frustrating (believe me, I know) but if you are 100% serious about buying a property, here are some options:

• buy something cheaper, probably further out/north, possibly at auction
• buy a flat in a small town, fix it up, flip it for the next one up the ladder
• get a personal loan (if you qualify) to use for "home improvements" and use that to help you fund the buy - keep in mind this is Naughty™ but some might argue is allowed if most of the purchase is from your 30k savings
• knuckle down and save for a few more years to show a much more reliable income stream, saving history and credit history, and then get a mortgage to buy a property with functional kitchen and bathroom

Your 999 is as useful as a chocolate teapot when the banks can clearly see you have only been handling credit worth a few pounds and your individual circumstances make you high risk. Nothing undoes the need for a good, steady credit history I'm afraid, except for time.

chilswelluk

monetxchange said:

I'm being asked for £52k to get a £200k mortgage just because I'm self employed (highish income and perfect credit too). 

So your 52k deposit for 200k is actually a worse ratio than my 30k deposit for 70k. 

chilswelluk

yksi said:

Your 999 is as useful as a chocolate teapot when the banks can clearly see you have only been handling credit worth a few pounds and your individual circumstances make you high risk. Nothing undoes the need for a good, steady credit history I'm afraid, except for time.

So how much should I be putting through a credit card to give lenders confidence?  Will a few pound on petrol here and there not cut it?  Also what about if I took out some personal loans which have no early repayment fee?  I could take a loan out one day and pay it all off the next.  I would then have some loans on my credit history, which were listed as settled in full.

yksi

chilswelluk said:

yksi said:

Your 999 is as useful as a chocolate teapot when the banks can clearly see you have only been handling credit worth a few pounds and your individual circumstances make you high risk. Nothing undoes the need for a good, steady credit history I'm afraid, except for time.

So how much should I be putting through a credit card to give lenders confidence?  Will a few pound on petrol here and there not cut it?  Also what about if I took out some personal loans which have no early repayment fee?  I could take a loan out one day and pay it all off the next.  I would then have some loans on my credit history, which were listed as settled in full.

Nobody knows every individual lender's magic list of What We Think Is Good, but it is reasonable to assume they'd be happier seeing a person on 38K spending £100+ each month and always paying it off in full. And the personal loan immediately repaid won't help you, it doesn't demonstrate a sustained, consistent management of debts and repayment of a responsibility. For that you need (yep) time.