lifetime mortgage to finish home extension project refused-help!

grey_heron

3 years ago we had enough to build our project twice over. Costs more than doubled, most of the building work is done, but we cannot fix a lifetime mortgage to finish the work as the house is not regarded as "habitable" by the surveyor. We are living in 3 rooms upstairs, the extension is waiting for the electrician to finish running his cables to the consumer unit in the garage. This is too full of stuff removed from the ground floor to give builder full acccess, etc.etc. Kitchen and utility waiting to be fitted out. We are in our 70's, and £ from sale of parents' house is running out. Ways to raise £ on "uninhabitable" but sound, brick and tile 4 bed detached 1987 property???

dunstonh

Kitchen is one of the key things to have in place when you go looking for secured borrowing.   If the kitchen is not present then lenders will usually refuse to lend (bathrooms being the other).   Redirect what funds you have to getting the kitchen done and you should find lenders more willing.

Different lenders have different definitions on how much of a kitchen & bathroom needs to be in place.    So, speaking this though with a local mortgage broker or IFA with equity release permissions should help as they can speak to different lenders as to what they need.

rc28

There are self build/renovation mortgages available, these should lend in your situation but are more costly than residential mortgages. It wouldn't be a lifetime though, you'd need to secure another mortgage once the works are complete.

Habitable usually means that it needs a working kitchen and bathroom, if it we're me i'd cobble a cheap temporary kitchen together to secure a resi mortgage. Different surveyors may have different opinions between them on what's habitable.

If you're living there does it not have a working kitchen?

MWT

grey_heron said:

3 years ago we had enough to build our project twice over. Costs more than doubled, most of the building work is done, but we cannot fix a lifetime mortgage to finish the work as the house is not regarded as "habitable" by the surveyor. We are living in 3 rooms upstairs, the extension is waiting for the electrician to finish running his cables to the consumer unit in the garage. This is too full of stuff removed from the ground floor to give builder full acccess, etc.etc. Kitchen and utility waiting to be fitted out. We are in our 70's, and £ from sale of parents' house is running out. Ways to raise £ on "uninhabitable" but sound, brick and tile 4 bed detached 1987 property???

You are going to struggle to get an equity release product approved as the lenders want to see a property that is easy to resell, in a good state of repair and free from clutter, which unfortunately all seem to be problems for you.

Have you got a number for the amount you need to borrow to get the work fully completed and the house restored to good order?

Once completed, do you have an estimate of the likely value of the property?

grey_heron

Thanks to all for comments.

We have a temporary kitchen upstairs in 1 bedroom (bedsit style) and 2 bedrooms clear to sleep / live in. The 2 bathrooms are not affected by works, but one has some stuff stored in it, as it supplies the kitchen sink (washbasin). Value on completion according to agent ~ 600k. Could do with ~150k to complete in and out. Rear extension 1 storey, utility + open plan kitchen, dining, living, snug. Kitchen area ready for install. Paint and lighting to finsh rest.

If we'd got the equity release 3 yrs back, before we got builder in, the house would be in the same "unmarketable" state as today!

Could try to get hold of surveyors objections and work on these.

MWT

Still needing to put another £150k, on top of whatever you've already spent, into a property that will only be worth £600k at the end doesn't feel like a great investment, but you are where you are at this point I guess...

Just to explore your options, is it possible to consider a different source of funds, like a Retirement Interest Only (RIO) mortgage?

That would require you to have sufficient guaranteed income to cover the interest payments and you would be stress tested on the basis that one of you may predecease the other, so the income has to remain sufficient in that circumstance as well.

Even if that is an option, it sounds like you will still need to resolve at least the kitchen issues before you are going to get a survey that will give you a useable valuation, but the criteria may be a little less stringent than the equity release options...

Do you think it would be possible to do that with the remaining funds you have available?

It sounds like you need to put some of your stuff into storage to create the space needed to continue the work and then focus on the 'abnormal' elements like the kitchen, assuming the rest of the building work is at least weathertight...

Frankly though, that £150k estimate is worrying as it implies you still have a lot to be done...