Remortgaging a hone I own outright during renovation

RGEARY1981

Hi, this is my second thread.  The first dealt with the builder fraud that got us in this situation. I won't go into that here but feel free to catch up on it here - https://forums.moneysavingexpert.com/discussion/6520523/builder-refusing-to-communicate-or-work#latest

The situation is now that we are £60k into our job with £30k left from savings and family help. We have no mortgage. The builders quote to get us to second fix is £160k so we want to borrow £80k to finish and repay family.

The house was bought cheap as it needed work. £165k. The finished house will be worth £280k so a massive financial mistake by us but we love the location and will be here for a very long time.

The building work made us unmortgageable - no roof or kitchen. We are watertight again in 4 weeks and a kitchen in 5 weeks. At that point we run out of money. The house will be watertight and have a functioning kitchen and bathroom but every room will need replastering and floors will heed to be rebuilt etc. It will look terrible for a mortgage survey!

The question is what funding route do we go down:

1. Unencumbered remortgage - issue being the place will look terrible at survey and the surveyor could be spooked.

2. Bridging finance to finish and then remortgage - worried about fees.

3. Renovation mortgage - high fees, bad rates.

Our total income is £70k per annum, less than £6k on 0% credit cards and no other debts. We are both on permanent contracts. 

Any advice gratefully received. How likely is it that a mortgage surveyor would be spooked by the renovation work? Would a refusal to loan based on a survey damage our chances in the future and damage our credit rating?

amnblog

You have described a piece of land with a shell on it. That is not suitable for standard borrowing.

This is a bridging case.

RGEARY1981

Thanks. I feared as much.

Would you recommend bridging or renovation mortgage? Builder says completion of works be end Feb.

No19v87

amnblog said:

You have described a piece of land with a shell on it. That is not suitable for standard borrowing.

This is a bridging case.

Far from an expert on this but would it make most sense to get a bridging loan to cover for cost to make the home mortgageable and then take out the mortgage to repay both the bridging loan and family/friends and any ‘finishing touches’ that don’t necessarily need to be covered initially to just make it mortgageable?

Otherwise including the family and friends repayment and extras in the bridging loan would make it much more expensive?

That is dependent of course of the necessity to repay family and friends by a particular date.

Sorry to hear of your experience too. A dreadful situation.