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

Anamox

Maybe a good start to building a bit of a more solid credit history is getting a credit card and buying everything on it, then paying it off with your earnings every month. This is what most people seem to do when they're young and want to own a property early, as they too may have "999" credit ratings but no history of handling larger amounts of credit.

chilswelluk

Anamox said:

Maybe a good start to building a bit of a more solid credit history is getting a credit card and buying everything on it, then paying it off with your earnings every month. This is what most people seem to do when they're young and want to own a property early, as they too may have "999" credit ratings but no history of handling larger amounts of credit.

It seems all a little bit silly.  I really have no need for a credit card, yet I have to jump through hoops and start using one to have a chance of getting a mortgage.  I know many people use credit cards, but I have never really seen the practical benefit for myself.  I have always budgeted my money accordingly.  But if I must have a credit card, I will get one.  I will look for a card with cashback etc, so at least I get something out of it, however it's still an inconvenience remembering to buy things on it etc.

chilswelluk

ACG said:

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. 

I looked at the ecology building society and also a number of self build options, but they require the project to be completed within 2 years.  Realistically, 2 years is far to quick for me.  Plus they say I need 20% deposit to buy the land and another 20% deposit for the build.  Given a little time, I could probably stump up the cash for those deposits. That would at least get me the land, however they pay money when milestones are achieved.  I wonder what would happen if after 2 years I made very little progress on the build?  - would they then recall all of the loan?

yksi

chilswelluk said: It seems all a little bit silly.  I really have no need for a credit card, yet I have to jump through hoops and start using one to have a chance of getting a mortgage.  I know many people use credit cards, but I have never really seen the practical benefit for myself.  I have always budgeted my money accordingly.  But if I must have a credit card, I will get one.  I will look for a card with cashback etc, so at least I get something out of it, however it's still an inconvenience remembering to buy things on it etc.

Would you hand your personal minibus keys to me without knowing anything, or would you check for a license, have a look at my car for scrapes and dents, go for a drive with me to make sure I'm not doing 50 past schools, make sure you know who I am, get a proof of my address etc?

The banks don't know you, they can't trust complete strangers, and they are looking for the evidence before they hand you their proverbial minibus keys. You think it's silly, they think, "Pfft I won't lend my very expensive large vehicle to a guy who hasn't shown me that he knows how to drive a small hatchback."

Anamox

yksi said:

chilswelluk said: It seems all a little bit silly.  I really have no need for a credit card, yet I have to jump through hoops and start using one to have a chance of getting a mortgage.  I know many people use credit cards, but I have never really seen the practical benefit for myself.  I have always budgeted my money accordingly.  But if I must have a credit card, I will get one.  I will look for a card with cashback etc, so at least I get something out of it, however it's still an inconvenience remembering to buy things on it etc.

Would you hand your personal minibus keys to me without knowing anything, or would you check for a license, have a look at my car for scrapes and dents, go for a drive with me to make sure I'm not doing 50 past schools, make sure you know who I am, get a proof of my address etc?

The banks don't know you, they can't trust complete strangers, and they are looking for the evidence before they hand you their proverbial minibus keys. You think it's silly, they think, "Pfft I won't lend my very expensive large vehicle to a guy who hasn't shown me that he knows how to drive a small hatchback."

What OP says is true though, it is essentially quite silly. However, I know there are many ways to look at it.

One way to look at it is:
- Person A: earns £50k in a solid job they've had for 10 years, has never used any credit facility, has years of bank statements showing they can live on the money they earn comfortably and do not go crazy with it. Cannot get a mortgage as they're untrustworthy.
-Person B: earns between £30k-40k in the last 10 years over 5 jobs, uses credit cards frequently to purchase things they can't afford but pays it off eventually when their annual bonus comes in, has purchased expensive cars on finance and has even bought things like iPads on finance and hasn't ever missed a payment. Gets a mortgage because they're "trustworthy". 

chilswelluk

yksi said:

The banks don't know you, they can't trust complete strangers, and they are looking for the evidence before they hand you their proverbial minibus keys. You think it's silly, they think, "Pfft I won't lend my very expensive large vehicle to a guy who hasn't shown me that he knows how to drive a small hatchback."

My grandparents and parents never had a personal loan / credit card in their life and all got mortgages.  In the history of banking, it's a relatively recent hoop that people have to jump through.

se2020

Banks need something to show you can pay back debts.  The easy way for them to see that is to look for loads of little green marks on your credit search.
So you need to have something that reports to a credit agency each month so they can click a few buttons and see you have made payments on time.
You might not have liked having credit before and might find a credit card an "inconvenience" and find it hard to remember to use it but a mortgage is a massive credit agreement and they want to see that you can cope with paying a loan back and remember to pay it on time.

Rent/utility bills etc do not report to credit agency's so you need to also have something like a mobile phone or credit card that does report.
Sure, the banks could just invite you in for a interview and decide if you are likely to pay it back or not but then an actual person has to make that decision and how would you fancy meeting somebody you did not know and deciding if you should lend them £70k or not?
Banks do not have a endless amount of money to lend and they have plenty of people applying to borrow it so it's an easy way for them to push more desirable borrowers up the list by ticking boxes.
Most 20yr olds with a job will be using mobile phones and paying for everything by card so they tick boxes well..

se2020

I think you will need at least 3mths worth of pay slip and an ongoing contract of employment to get any sort of mortgage. 

I have a decent income, very good credit history, the maximum personal loan available to me is about £30k from my own bank.

Agriculture mortgages require a 50% deposit (or agricultural assets of 125% of the value to secure against) plus you need to have an agricultural business plan for the property. 

Self build mortgages need at least a 20% deposit of the purchase price plus 20% of he rebuild costs. You also need the income to cover the multiple for the total loan.
So if its £100k to buy plus the conversion cost is £100k you need £40k up front and an income to support £160k of borrowing (£35k?)

Most lenders say the project needs to be done within a certain time frame. They release the funds in stages so if you don't build it as fast as you should I don't know if they call in the full amount and evict you or if they just won't lend you any more in which case you could just keep making the payments and carry on as you wanted to any way... 
You will probably have to pay for plans and quotes for the work to show the lender upfront as well. This takes a while and the seller is likely to send the property to auction or sell to a cash buyer before you get the funding leaving you out of pocket.

There are no lenders who will do what you want and just lend you money to buy a plot/project.
If you are feeling brave you could use other forms of finance (probably expensive), buy the place, remove the tree, patch the roof, fit a sink and toilet and meet all the other requirements (mains electric/drainage/etc) within a short timeframe then get a normal residential mortgage to pay off the loans. 
You will run into the same problem getting a large loan as a mortgage in that they will.want credit history, and you will want to be able to borrow enough to buy and do enough work to make it habitable/mortagable over a short time frame.

I don't know why places like this are so hard to finance? Whenever somebody on here complains that houses are too expensive every poster jumps in on them and tells them to cut back on the coffee shops and tells them they will have to make do with a "fixer upper" rather than a 5-bed new build.
When I was a lad my parents first house was a shell with no roof and we all lived in a caravan for 3 years while it was turned into a 2 bed then it took another 3-4 years until we all had our own bedrooms. 
I suppose the main difference was the purchase price was just under a years wages for my parents. 
On the other hand a shell of a house thats priced at £100k sounds like the kind of place that will be worth £350k+ when done and if you have ambitions to live somewhere like that I reckon it's going to be a few years with a job and a few £ more up front.

[Deleted User]

chilswelluk said:

ACG said:

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. 

I looked at the ecology building society and also a number of self build options, but they require the project to be completed within 2 years.  Realistically, 2 years is far to quick for me.  Plus they say I need 20% deposit to buy the land and another 20% deposit for the build.  Given a little time, I could probably stump up the cash for those deposits. That would at least get me the land, however they pay money when milestones are achieved.  I wonder what would happen if after 2 years I made very little progress on the build?  - would they then recall all of the loan?

Yes, they could recall the loan because you wouldn't have abided by the terms you agreed to when you took the loan out in the first place.

https://www.ecology.co.uk/wp-content/uploads/2020/01/Mortgage-Conditions_EW_01.2020.pdf

Very few people by their 'forever' home as their first home.  If you bought something you could afford that required a lot less work you could overpay the mortgage to build up equity and protect yourself against HPI, then further down the line look at renovating an uninhabitable house. 

[Deleted User]

Anamox said:

yksi said:

chilswelluk said: It seems all a little bit silly.  I really have no need for a credit card, yet I have to jump through hoops and start using one to have a chance of getting a mortgage.  I know many people use credit cards, but I have never really seen the practical benefit for myself.  I have always budgeted my money accordingly.  But if I must have a credit card, I will get one.  I will look for a card with cashback etc, so at least I get something out of it, however it's still an inconvenience remembering to buy things on it etc.

Would you hand your personal minibus keys to me without knowing anything, or would you check for a license, have a look at my car for scrapes and dents, go for a drive with me to make sure I'm not doing 50 past schools, make sure you know who I am, get a proof of my address etc?

The banks don't know you, they can't trust complete strangers, and they are looking for the evidence before they hand you their proverbial minibus keys. You think it's silly, they think, "Pfft I won't lend my very expensive large vehicle to a guy who hasn't shown me that he knows how to drive a small hatchback."

What OP says is true though, it is essentially quite silly. However, I know there are many ways to look at it.

One way to look at it is:
- Person A: earns £50k in a solid job they've had for 10 years, has never used any credit facility, has years of bank statements showing they can live on the money they earn comfortably and do not go crazy with it. Cannot get a mortgage as they're untrustworthy.
-Person B: earns between £30k-40k in the last 10 years over 5 jobs, uses credit cards frequently to purchase things they can't afford but pays it off eventually when their annual bonus comes in, has purchased expensive cars on finance and has even bought things like iPads on finance and hasn't ever missed a payment. Gets a mortgage because they're "trustworthy". 

This isn't really true thought is it. Person A could still get a mortgage and just because Person B uses credit cards it doesn't mean Person B is using those credit cards to purchase things they can't afford. I purchase most things using a credit card because I find it safer using a credit card online, I get cash back and I have used the S75 protection to save my bacon on more than one occasion. All those benefits and I never pay a penny in interest. Go me!