Mortgage where house needs work

[harrietm87]

I've posted before but still stuck!

We are trying to buy a fixer upper. We've had a building survey that says it's structurally sound, but recommends replacing wiring and plumbing (existing wiring and plumbing work but are old).

There is a working sink in the kitchen but nothing else. There is a new bathroom.

Our lender won't lend as they say it is uninhabitable. They haven't said it's due to the kitchen but I think it's likely.

My questions are - has anyone bought a house in this condition and who was your lender? Should we take the risk of asking sellers to let us put a cheap kitchen in before exchange and then approaching new lender for valuation?

I just don't know how to move forward - it's relatively minor work which we will obviously do once we complete, but so hard to do it before then (which seems to be necessary). I'm hoping other lenders are a bit more flexible.

No idea but watching with interest!

How are you raising funds to complete the work? What is your loan to value at the moment?

If you can prove you have funds to complete the kitchen and electrical plumbing work - can tonspeak to your lender again? Or even a manager higher up?

Lots of people said on your other thread to contact a mortgage broker - have you done that?

The worst house we ever bought and got a mortgage on was really run down. However, it did have a partial central heating (the boiler was about 45 years old) and electrics that featured some 30s bakelite switches... So it was all terribly old and run down but there was a working bathroom and the kitchen did have a hob, oven, sink and some units. I can't remember which bank it was but it didn't seem to pose a problem. If you can't get a normal mortgage, have a look a bridging loan. The interest is higher but once you've done the place up, you can switch to a normal mortgage.

We consider a house habitable if there's a working kitchen and bathroom, I don't know what we consider to be a kitchen whether it would have to appear something to prepare food with rather than a sink?

I posted on your other thread.

To my mind, two options for going ahead:

1. A refurbishment mortgage - for example www.saffronforintermediaries.co.uk/buy-to-let-light-refurbishment-case-study/

2. A bridging loan to buy the place, do the work and then re-mortgage once the kitchen is in. For this to work, you need to know the reason the surveyor said no for sure, and rectify it during the bridging period.

There is an Option 3 involving getting the seller to install a kitchen with the agreement that you'll then buy, but it's a bit tricky.

From a bit of experience in BTL, if you need a broker for a complicated mortgage, Lisa Orme (Keys Mortgages) or Kevin Wright (can't remember the agency, something Ninja?) are both good. No affiliation to either, but both can squeeze blood out of a proverbial stone when it comes to raising mortgage finance.

Our house was pretty much uninhabitable. It did have a very basic kitchen but needed new floors, ceilings, electrics, plastering. Everything bar knocking it down really. We got a mortgage with HSBC but we did have 40% equity (in London) so I guess they saw us as low risk as they'd get their money back if it all went wrong.

Like the above poster said, I'd also recommend going to a broker instead of going down the kitchen route.

You need a broker to point you in the right direction.

We have a 25% deposit and have been approved for borrowing in excess of the 75%.

We also have a broker who is proving useless! We have asked him to pass our building survey to our existing lender to see if they can challenge the valuation, but not holding out much hope hence trying to investigate other lenders/ hoping people can advise from their own experience.

Alternatively if you can recommend good brokers I might switch.

Thanks - missed some posts while typing my reply.

essential I've had a look at refurbishment mortgages but they all seem to be BTL for some reason. Will keep looking though.

Thanks also for the broker recommendations. I'm thinking of switching as my current one has stopped responding to my emails!

I'd give Lisa a go, OP - honestly, I think our purchase would have fallen through without her.

One other idea is to ask on Property Tribes - the MN of BTL - as people who are experienced may come up with other things. I expect you'll get a lot of "Get a broker".

So after long chat with our broker I think we're going to go for bridging finance, and ask for a price reduction to basically cover the financing costs (c.10k). We can't afford it otherwise and if they don't sell to us the sellers will have to auction it, so hoping they agree.

Alternative suggestion was to go for delayed completion, do the works post-exchange and get existing lender to revisit valuation, but that sounds risky to me.

Thoughts and experiences welcome!

So after long chat with our broker I think we're going to go for bridging finance, and ask for a price reduction to basically cover the financing costs (c.10k).

Just make sure you know exactly why surveyor rejected it the first time, and be very tight on time - get materials, contractors etc ready well in advance, because you want to be on the bridge for the absolute minimum time.

Good luck OP. Completely doable, just needs organisation.

I'm surprised you aren't buying at auction. Why not look into it as you're a cash buyer?

I'm surprised you aren't buying at auction. Why not look into it as you're a cash buyer?

Not a cash buyer - need a montage hence why this whole issue has come about?

Yes thanks kiroro is right - definitely not a cash buyer - that's the problem! We have a 25% deposit and need a mortgage for the rest. If I had that much cash I wouldn't be buying something that needs this much work!

Has anyone had experience with bridging loans? The internet is full of scare stories.

We did / are doing this.

Problem was we thought we had enough money to do everything but now don't & are on a fixed rate! So parents are lending us £ to get past building control, we can then go back to bank & release equity.

When purchased it technically has kitchen & bathroom. Now it has neither do deemed inhabitable.

The other option was to move mortgage to a self build but we would have a fixed rate exit fee.

Would a self build mortgage apply to you?

@GreyBird84 so you got bridging finance? Was it also to fund a renovation? And what do you mean by now on a fixed rate? How long was your bridge intended to be for? I'm really interested to hear how it's worked for others as everything online says not to touch bridging loans with a barge pole.