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help please- 31k loan needed for house

bestyman
bestyman Posts: 1,122 Forumite
Part of the Furniture 500 Posts Combo Breaker
Hi all,
Will try keep this as short as possible.
We live in a council house and have applied for right to buy .
RTB price 31k
house value ( without our improvements) 45k
true value is at least 60k.

Can only get mortgage at 9.5% as the house is made of concrete and not too many lenders interested , halifax will lend at normal rate if extra wall built around house and estimates vary from 25k to 42k. Don`t really want to have house repaired as basicly its ok as it is . Houses of this construction usually sold to cash buyers( landlords) at around 70k. Anyhow thats not the problem .

Rather then mortgage at 9.5% we want to get a personal loan at say 6.6% ( surely that makes sense).To complicate matters more my credit is not good for another 2 years even though now I am earning good money so the loan needs to be in my partners name.

We could afford to pay £500 a month but I dont think the banks will lend on these terms as my earnings are not taken into account. My partner is on 17k so if all the bills were paid by her she would have £315 a month to spare after gas , elec, food, council tax etc. With this in mind we are thinking of asking for a 25k loan over 10 years with repayments of £281 a month.

We don`t want a 10 year loan hanging over us so I was thinking that we could pay £281 a month to them and put £220 a month into savings and when the savings are the same as the settlement figure pay it off . Another option is an egg loan where you can pay more each month ( not sure how this works, does anyone know?)

We don`t want to dint credit score by applying for the impossible so the bottom line is will the banks lend? Which bank is more flexible? Are Egg ok?

Any help please - big decision here .

Thanks

Paul
On the internet you can be anything you want.It`s strange so many people choose to be rude and stupid.
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Comments

  • fatboyonadiet
    fatboyonadiet Posts: 5,400 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Have you checked your credit file? You might struggle to get a loan for that much on a low income, can you not do a joint application? Flexible loans normally have higher interest rates, Cahoot do one too, not sure what they're like but they rejected me for a current account once!!!
    2p off is still 2p off!
  • lush_walrus
    lush_walrus Posts: 1,975 Forumite
    I would recommend that you seek out a local mortgage adviser for this matter. Your case is very complicated and an experienced adviser will be able to search all mortgage companies properly for you and find a good deal.

    Make sure that the adviser is truely 'independant' and not tied into a few lenders. You can check this simply by asking them who they are tied into.

    Also although buying on paper makes sense. Check with your local estate agents regarding the worth of your property, ask one to come and give you a valuation to check the value and make sure it is worth buying.

    Bear in mind that the problems you are having with finding a mortgage to provide a loan, a buyer in the future will also have the same problems.

    Check also the 'life' of your property, teh reason that mortgage companies do not like to lend on concrete, is partly due to the fact that many concrete construction houses/flats were previously built to provide mass housing fast and were designed to have a life of a certain amount of years. So check this too.
  • bestyman
    bestyman Posts: 1,122 Forumite
    Part of the Furniture 500 Posts Combo Breaker
    Thanks for replies.
    We have been to 2 independant mortgage advisors and also rang the ones that Martin reccomends. Best deal from anywhere was over 9% with various fees adding up to about £1,500 and little options for early repayment. This is why we are thinking of a bank loan as none of these disadvantages.

    I might be wrong ( please tell me if you can see a flaw in my plan) but this is the way I see things. At the moment rent is £200 a month . A 10 year loan is £280 over 120 months so in effect thats 120x80 , thats £9,600 cost to purchase the house taking into account the saved rent??????? assuming 10 year term.

    Good point about the house falling down, there are thousands of them round here and none fell down yet but the council is slowly repairing them but no plans to do this one in the forseable future.

    Can anyone please answer this, supposing in 10 years the council decide to knock them down what happens then?? do i get the market value?
    Is the land alone worth 30k?? very big gardens all round.

    Regarding the value , I have seen similar properties unrepaired for 70k cash only , bought by landlords to rent out at £450 a month. I suppose when we do move we could rent this out at £450 a month and put that towards the mortgage on the new house, does this make sense?

    Any help appreaciated

    Thanks

    Paul
    On the internet you can be anything you want.It`s strange so many people choose to be rude and stupid.
  • vale_2
    vale_2 Posts: 56 Forumite
    Hi
    With regards to your question re the council knocking your house down after purchase...they can only do this as part of a compulsary order. You will own the house and this will be reflected at the land registry.So unless they are going to biuild a road thro' your estate or a new Tesco you should be fine.
    It seems the interest rate you are being offered is to do with the proerty type and your credit rating as it seems quite high???
    ;)
  • fatboyonadiet
    fatboyonadiet Posts: 5,400 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    If when you get a new house you have a nice deposit best to rent this rather then sell as long-term it will see you nicely and then if you do ever sell you are likely to get more than 70k, of course not guaranteed to and it is hassle but a letting agent takes some of that away.
    2p off is still 2p off!
  • lush_walrus
    lush_walrus Posts: 1,975 Forumite
    Try to find out exactly what work the council are carrying out on the properties, prior to buying yours. If it is mere replacement of windows or cosmetic work, then dont worry but make sure it is not anything to do with structure first. As once you buy it, you will be responsible for carrying out the work that may be required.

    Check that they are not vulnerable to subsidence or that they have a design flaw. Do you know what date your house was built?

    If there are design flaws in your property, or the works being carried out are structural, hold off on buying. The cost of some of these works can be very high and the last thing you want is to have to stomache the costs shortly after buying the property. If they are structural, then you have good reason to get the council to phase in the works to yours immediately. If you make enough fuss and state you are very concerned, then they will bring your property forward.

    With regards to knocking down your house, as stated above, this would only occur if the council deside to make a compulsory purchase order on your property. This can happen but is a minimal risk for most areas. The reason for many compulsory purchase orders are developers buying up areas for development, such as un-used land or plots earmarked for regeneration. The idea is that the developers pay market price for every plot they require in order to carry out the development, ie provide access, complete the scheme etc. The developers have to offer a reasonable price, but if an agreement between the developer and the owner can not be met, then the council assesses whether that plot is required for the development to go ahead. At this point the council may decide the development goes ahead without your property, and builds around you if you like, or step in and make a compulsory purchase. The price is then fixed by the council, and can in my experience go either way, the price may be lower than the true value or indeed in some cases higher. But I dont think this will be a problem on your case but if you are concerned, check with the planning department of your local area and ask if there are any masterplans for your area. If there are then your property may well be at risk, if not then don't worry.

    But do check what repairs are being carried out, that in my opinion is the most important issue for you as it stands. And on a side note, if the repairs aren't structural I wouldnt get them carried out by the council. The council will charge you for new windows etc, the same as if you had them installed yourself and take away your choice of what you would prefer.
  • bestyman
    bestyman Posts: 1,122 Forumite
    Part of the Furniture 500 Posts Combo Breaker
    Hi all,
    The repairs are structural. Its the reinforcing rods in the concrete that corrode. Man at council said that its not a problem but they have to be described as defective as they are not to spec.
    The council have plans to rebrick them all eventually but no dates yet.
    To complicate things even more if I bought my house and then the council decide to do the others I can get mine done at a discount and VAT free.
    So it seems there is no point getting the work done now at full cost. Looks like back to plan A and find 31k to buy it cash.

    Bottom line is any advice on where to get 31k unsecured?

    Thanks again
    ps in regards to not buying it as it requires structural work I still want to as its a bargain. Even with repairs done the house will still be worthwhile.
    On the internet you can be anything you want.It`s strange so many people choose to be rude and stupid.
  • lush_walrus
    lush_walrus Posts: 1,975 Forumite
    Ok, I can't help with which lender to go with, but one thing I would just add further is make sure you get all of this confirmed in writing from the council. Should you sell in the near future after buying, and the works that are being carried out by the council are flagged up, you will be able to give this information to the potential purchaser.

    Also, if you get it all in writing, should the council go back on their word or something structural go wrong in regards to the areas they are correcting, you have proof of your concern regarding the structure.

    good luck with it all
  • you have a pm
    2007 is my getting slim year
    Total weight loss so far is 16llbs:T
    Total to go 15 pounds:eek:
    Not no more as im having a baby:D
  • Spendalot_2
    Spendalot_2 Posts: 59 Forumite
    Friends of mine have just purchased a house with what 'i think' was an issue with concrete.

    They used Accord Mortgages. I know there credit history is less than perfect, and they borrowed a high amount in relation to this incomes at a reasonable rate (think it was 5.99)

    Do a search on google for 'accord mortgages' to find the website.

    Let us know how you get on...
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