How can I borrow £45K ??? (legally and fast!!)

[pinkingshears]

I want to move and have found a fixer-upper which is going to auction at £45K (seller accepting bids prior to auction date of 1st May) This property has a Home Report (I am in Scotland) value of £90K but the HR says that £15K of work needs doing before funds should be released so is not mortgageable at present.

I would therefore need to borrow funds via a different method. This is hard as I am not employed but am a full time carer for my disabled young person. My income is 2K per month (all benefits, some Carer's some UC and some PIP)

My current house has an outstanding mortgage (taken before I stopped work) of £100K, this is due to expire in 2029 and is interest only so I currently pay £192 p/m. I will need to sell then but this place is perfect for 'getting ready' for that.
My house should fetch no less than £275K if sold (identical house opposite sold for £350 last month) which would leave a balance of £175K so plenty of equity. but not enough time to sell before fixer upper auction.

Will I be able to obtain Bridging Funds or is my income too low for affordabiltiy please?

You currently have secure housing at a very reasonable rate for the next 4 years.

the initial £45k price is a ‘come and get me’ and will generally be exceeded quickly. Do you have experience of building/diy projects? Hiring people is very expensive at the minute.

I would stay out for the next 3/4 years, then look to sell if you are unable to afford a new mortgage rate and try to buy something with the £175/250k of equity you have outright.

This is crazy, I have no idea why you are even considering doing this? You are on benefits?

Bad idea. What if it goes for far more than 45k?

You drop out of the auction, fine. You've then got a 45k loan you can't pay back without selling your house & then you're on a time crunch before you're defaulted on the loan.

Please don't do this.

This is a really terrible idea, please don’t do this op.

This sounds like a terrible idea OP. Have you got a background in building trades? Are there no legal or auction fees? Would you not have to pay any bills on the properly even when it’s empty?

It’s a very stupid idea. You’re on benefits… How would you pay it back? How could you afford the repayments and moving costs?

You have a home for your disabled child. Why disrupt them on a whim?

Another vote for no. I also don’t think you would meet the affordability criteria for the loan.

Unless you have had a proper survey done on the auction property you should walk away.

Bargains are not always a bargain when you look closely.

I can see how it looks like an exciting opportunity but it’ll go for a lot more than £45k, and the amount to do it up will be loads more than £15k - £15k doesn’t touch the sides on renovations these days. Absolutely don’t! Even if you managed to secure it, the stress of mounting building costs would be awful and it sounds like you have enough challenges in your life 🤗

I actually hope you can't get this money because its a bad idea

Another vote for bad idea - let things play out with current house then buy at auction with cash if you really want to 🤷‍♀️ it probably wont go for 45 and i highly doubt its only 15k to bring it round

If you want to move then sell your house like a normal person , you cannot afford to do what you are proposing and frankly nobody should be loaning 45 k to someone who has no employed income as it would be highly irresponsible. Besides which you only need to watch a few episodes of Homes under the Hammer to realise that very few auction properties go for on / below the guide. Where will you be getting the money to do the house up ?

There is a Home Report and a full structural survey available (which I've seen)
My mortgage is about to change rate anyway. My current housing isn't suitable for my mobility so I need to move. This new house could be made suitable and
I would offer the figure I've suggested. The vendor said that might be enough as it has returned to the market because previous offerer couldn't get a mortgage.
I would offer on that basis. £45K take it or leave it. If not taken, I'd 'walk away'.

So, I wanted to ask if it is possible to borrow against my equity before I sell, given my income, not if it is wise?

What's the costs for doing up the property. I know you mentioned 15k but that was only to bring it to an initial state to release funds, how much else needs spending?

But again what about the after costs? Council tax for 2 houses?

Id be absolutely shocked if your affordability passes

Will you be entitled to UC with two houses? I think not. Pip and ca would be ok but you'd have to declare the second home to UC and it would be stopped.

Just answering your question and not commenting on your choice; have you put your details into an affordability calculator?

This will give you an idea what, if anything, you could raise

Well, this is what bridging loans are for, but they're not without risk and you don't want to be in a position where you can't afford to pay it back within the agreed timeframe and you end up losing all the equity you've built up in your first property and potentially losing the second home as well. I think you also need permission from your mortgage lender for a second charge to be placed against your home.

https://hoa.org.uk/advice/guides-for-homeowners/i-am-buying/bridging-loans-explained/

Surely this would mean you were no longer entitled to UC?

The idea is to borrow to buy the 'wreck' now. Put my house on market. Begin to do the works to house. Sell up, move in. Yes there would be an overlap re Council tax, 2nd home tax (hopefully no more then 6m). Of course I'd declare it so my UC would stop yes. Whether it started up again would depend of money left over but I might end up with a aod up, warm, insulated house that's suitable for my mobility needs which would make it all worthwhile. Again, I've thought it through, had a (very expensive) offer from one Bridging Co (& verbal permission from current lender) but wondered if there was any other way.

Terribly risky to get bridging loan and expensive for a reason. How will you afford to refurbish fixer upper on benefits as you won't have sold and moved out of your current home according to your plans

You say it’s suitable for your mobility needs. Is it a bungalow, by any chance?

If so, there’s no way you will get it for much under Home Report value. There will be a huge amount of interest in it.

You really would need balls of steel to attempt to do this. If you do want to go ahead I imagine your first port of call would be an adviser or broker in bridging loans.

Do have have the necessary contacts to do all the work on the house?

UC will depend on the equity in the second home. If there's no equity then it won't affect UC.
Lots of info here if you scroll down a bit: https://cpag.org.uk/welfare-rights/key-topics/survivors-domestic-abuse/value-property-and-its-effect-means-tested-benefits

Check on auction fees and additional costs. It can sometimes be £1000’s.

I should add, it seems I have a Bridging offer, but as time is tight and as an initial agreement is often varied when it gets to the underwriting stage, I wanted to explore if there were any other options.