Getting a loan for purchase of London flat.

grahamt522

I'm fairly new to property (I have purchased and sold a flat). I live in Devon and I'm thinking of purchasing a flat at an auction in London as you can get a good rate of return on doing it up. I'm cash rich but income poor. 

I would need to borrow approximately £190,000, is there any way I would be eligible for a business loan or bridging loan without income secured on the property? I would keep £50,000 in reserve if flat didn't sell straight away to pay for the loan payments. Any advice would be gratefully received.

eddddy

grahamt522 said:

I'm fairly new to property (I have purchased and sold a flat). I live in Devon and I'm thinking of purchasing a flat at an auction in London as you can get a good rate of return on doing it up. 

I'm not sure you would get a good rate of return. You'd be competing against lots of property professionals - like builders, developers and investors - who could probably do the work much more cheaply and quickly (and perhaps more professionally) than you could.

In your position, I'd be tempted to look outside London where a similar property might cost £190k less - so you don't have to borrow any money, and you don't have the stress of interest costs piling up each month.


(The interest on development finance of £190k might be £3k per month or more. And I think you'll struggle to find anyone who'd trust a 'first-time developer' enough to lend them £190k.)

hazyjo

Also, many properties, flats especially, will be in auction because they're unmortgageable. You also have to have all your ducks in a row such as legals, financing, survey, etc. Plus many go for WAY over guide price.

sidneyvic

Who told you, you can get a good rate of return "doing it up".
Cost of materials are through the roof, unless you know any trades your going to have to pay them through the nose and wait weeks for them to turn up.
All the while paying interest through the nose in a quickly declining market.
This all of course is all dependant on you knowing what you are looking at when viewing this auction flat as once youve won it there is no backing out once you find it is about yo fall down....