mortgage for defective property

ker_3

Hi
i have a bad credit rating and want to buy my council flat the problem is that its classed as defective, being of cornish build, its a lease hold, will it be possible to get a mortgage on it. any advice much appreciated.

payless

Are they even willing to sell it!

If so how much

OR could you get a council transfer to a non defective property.

ker_3

yes, ive put in for rtb, im just waiting for price (any day now) they are selling between £2000 - £5000 depending on the discount. a loan would be ok, just dont know how i go about it all with it being a defective property??

payless

As you imply - at that level a (unsecured) loan might be easier, as I believe most lender will not lend on defective- as not considered good security and perhaps this in its self might lead to to ask question if good purchase anyway, but suppose if paying rent......
would compare costs of both

( remember less benefits if unable to pay mortgage, than rent)


pasted from ODPM

Defective dwellings

Certain types of houses and flats have been designated as defective under Part XVI of the Housing Act 1985, because:

they are defective by reason of their design or construction; and their value has been reduced substantially because their defects have become generally known.
If your home is one of these, your landlord must tell you before you buy. You should then consider very carefully whether it is wise to buy. You might have difficulty in selling later, because anyone thinking of buying your home from you might be unable to get a mortgage. If you do decide to buy, it is very important to find out the structural condition of your home. You should make sure that the price you pay for it reflects the structural problems and the fact that you may find it difficult to re-sell it later.

also up keep costs likely higher , and I would have questions over insurance- could turn into a money pit


The site - https://www.odpm.gov.uk / and leaflets from your council will guide you thro it, if you still are keen

MarkyMarkD

There's no point getting a mortgage for those sorts of amounts - they are below most lenders' minimum loan values in any case.

You could get a personal loan over (say) 5 years and I presume that you can afford the repayments - it would be less than £40 per week which isn't a lot.

A nice cheap way to buy your own place, if you can cope with the place being officially viewed as defective.

A HUGE issue with ex-council flats is service charges. Some tenants have bought and then find that the service charges are more than their rent was previously. If the council decides to renovate the properties (possibly to fix the defective nature of them) you might have to pay your own share and have no control over whether they do the work or not.

Now, if this DOES address the defects, it might make the property mortgageable and not a problem. But if it doesn't, or the lenders don't believe that it's a good risk for them (ex-council flats are virtually impossible for lenders to sell on, in some areas) then you might be stuck.

ker_3

thanks for the advice, my concern is that i will be hit with a huge bill in the future even though these properties have been up for over 40 years. much appreciated, you have highlighted my concerns.