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

[Deleted User]

chilswelluk said:

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. 

@moneyxchange might have a higher LTV then you're looking at but moneyxchange has more credit history, more employment history and a higher income than you.  (S)he is also purchasing a habitable property which is less risk for lenders.

[Deleted User]

chilswelluk said:

Petriix said:

you should probably build up your credit history.

The strange thing is, it seems my credit history may not be so bad after all.  I signed up to Experian some time ago and just checked and they said I have a credit score of 999 (which they say is excellent), however I have not paid for the full report.  Not sure how I have such a high credit score, being as though I don't use credit cards, car finance, personal loans etc.  But then come to think of it, I pay my car insurance in instalments, so I guess that counts as credit.

Experian don't lend money so the score they give you is irrelevant.  It's your credit history that's important and you can access your credit history held by Experian for free by joining the Money Saving Credit Club.  You can access your Equifax report for free using ClearScore and your TransUnion report via Credit Karma.

chilswelluk

Lover_of_Lycra said:
 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. 

Without having a crystal ball, it's impossible to say if this is true.  If house prices tank because of Corona etc. then I may be left in negative equity, living in a place that I never wanted to buy.  I could be stuck there for years before I got my money back.  I have an uncle who was burnt very badly on property in the 1980s crash.  The whole thing could turn into a nightmare.

You also talk about property that I "can afford".  But I only want to borrow 70K on a 38k salary (that's not a large ratio) .  Any property in the area  that is habitable (close to my job) will see me borrowing a lot more than 70k.  It may be easier to get a mortgage on a habitable property, but nevertheless it commits me to borrowing more money and will not be as "affordable" (nor see the long term returns) than living in a caravan and taking 10 years to renovate a property.

chilswelluk

se2020 said:

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... 

If it was just a case of them not lending any more money and I could stay there as long as I continued to make payments, then I would be laughing.  This is something I need to find out - does anyone know about this?

grumiofoundation

chilswelluk said:

Lover_of_Lycra said:
 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. 

Without having a crystal ball, it's impossible to say if this is true.  If house prices tank because of Corona etc. then I may be left in negative equity, living in a place that I never wanted to buy.  I could be stuck there for years before I got my money back.  I have an uncle who was burnt very badly on property in the 1980s crash.  The whole thing could turn into a nightmare.

You also talk about property that I "can afford".  But I only want to borrow 70K on a 38k salary (that's not a large ratio) .  Any property in the area  that is habitable (close to my job) will see me borrowing a lot more than 70k.  It may be easier to get a mortgage on a habitable property, but nevertheless it commits me to borrowing more money and will not be as "affordable" (nor see the long term returns) than living in a caravan and taking 10 years to renovate a property.

If you want to buy a property with a mortgage what you can afford is not determined by how much you think you can pay but by how much the lender will lend you.

As it stands you seem unlikely to be able to afford a 100k non-habitable property but you can afford a ~200k habitable property (4.5 x mortgage plus 30k) because someone will lend you this money. 

[Deleted User]

chilswelluk said:

Lover_of_Lycra said:
 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. 

Without having a crystal ball, it's impossible to say if this is true.  If house prices tank because of Corona etc. then I may be left in negative equity, living in a place that I never wanted to buy.  I could be stuck there for years before I got my money back.  I have an uncle who was burnt very badly on property in the 1980s crash.  The whole thing could turn into a nightmare.

You also talk about property that I "can afford".  But I only want to borrow 70K on a 38k salary (that's not a large ratio) .  Any property in the area  that is habitable (close to my job) will see me borrowing a lot more than 70k.  It may be easier to get a mortgage on a habitable property, but nevertheless it commits me to borrowing more money and will not be as "affordable" (nor see the long term returns) than living in a caravan and taking 10 years to renovate a property.

What long term returns?  I thought you were buying your forever home not an investment property?  It's moot anyway as there doesn't appear to be any financial product available to you for the timescales you want.  You either need to save a lot more money or rethink the type of property you buy.

[Deleted User]

chilswelluk said:

se2020 said:

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... 

If it was just a case of them not lending any more money and I could stay there as long as I continued to make payments, then I would be laughing.  This is something I need to find out - does anyone know about this?

As I said in a previous post, the lender could recall the loan because you would have breached the terms of the agreement by not completing the build within the agreed timescale.

chilswelluk

grumiofoundation said:
As it stands you seem unlikely to be able to afford a 100k non-habitable property but you can afford a ~200k habitable property (4.5 x mortgage plus 30k) because someone will lend you this money. 

That may very well be true, but I'm not playing that game.  The plan is to become mortgage free as soon as I can and I absolutely refuse to borrow more than 100k.  Neither will I buy a property that I have no interest in, particularly as I fear the market could tank and I may be left in negative equity.  As I say I could be trapped there for years before I got my money back. The only thing that interests me is a long term renovation project that I can can do in my own time / when money allows and is likely to take 10 years or more to complete.

I will investigate the ecology building society etc., but if I get no joy from them, then I will get saving and aim to become a cash buyer.  In the best case scenario, the property market may tank and I get to buy a non-habitable property quicker than I thought.  I have just found a cheap room in a shared house for £70pw.  With my 38k salary, I should be able to add to my 30k savings quite quickly.  The place is a bit of a dive and is shared with younger people in their early 20s.  It's not ideal when you are middle aged and used to your own space, however it seems I may not have many options.

kingstreet

You need to separate your personal circumstances from the property.
You are probably mortgageable. If you have a written job offer and confirmed start date there are lenders which will lend.
If the property is unmortgageable, the above is moot. The lender will send a surveyor who will suggest a 100% retention. That means £0 will be released until the property has been put into a habitable standard. If you were able to continue once your 30% deposit is "invested" in purchasing the property, where are the funds going to come from for the renovation?
You mentioned the agricultural situation previously. This is a problem not a benefit. Agricultural restrictions will put-off most lenders. As you don't intend to develop the property for agricultural use specialist loans for this purpose would not be available to you.

chilswelluk

kingstreet said:

 If you were able to continue once your 30% deposit is "invested" in purchasing the property, where are the funds going to come from for the renovation?

The funds would come from my salary.  I would live in a caravan on site and I would not be in a rush to complete the renovation - it may well take more than 10 years.   It would be a case of throwing money and time at it, whenever I can.  I don't want to be under any pressure to have to complete within X years.