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  • Refurbish/Develop

    Light refurb mortgage quesion

     

    Hi all,

     

    I have a question about the rental aspect of a light refurb product.

     

    Obvioulsy if you are going for a light refurb product and the property is not lettable from day one, how is the mortgage given as BTL's mortgages are normally advanced if the rent exceeds the mortgage x 125% but until the property works have been completed obvioulsy there is no tenant/property not lettable so how is the mortgage worked out ie do you yuorself have to service the mortgage? Or

     

    Is the monthly mortgage payments put on hold until the property is lettable or would you have to fund the purchase until works have been done, the go for a further advance knowing the tenants could pay for the interest payments?

     

    (Side Question: im looking to buy a residential property which is a bit run down, on the market at £74,999 similar comps are on at £90-95k, needs about 5k-7k worth of works: what product can I use?eg can i use a refurb product for a resi purchase and will there be some kind of retention?If so, can you go for further advance on the value after works?Not to sure how products work with a resi property/mortgage which require works?)

     

    Thank you.

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    The Valuer will value the rent based on completion of works. This product accept it's not lettable day one. You must complete the works and drawdown within 3 months so you're not vastly out of pocket and yes you will have to pay the mortgage for this period.
    There's no similar product for residential but usually resi lenders are more flexible; the property usually has to be habitable. In the lenders eyes there is a big difference between habitable and lettable.
    To do a refurb/drawdown on resi would usually involve bridge then remortgage or mortgage then apply for a further advance subject to affordability.
    KR, Lisa
    https://www.keys-mortgages.com
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    Lisa All comments are for education and information purposes only and do not construe as advice or a financial promotion. No liability is accepted for comments made. If you wish to receive information in an advisory capacity then please contact me about becoming a client. www.keys-mortgages.com

    Hello Lisa,

     

    Thank you very much for this.

     

    What is the difference from the lenders eyes in being habitable and lettable? (one for resi the other for BTL?)

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    Its not necessarily a resi vs buy to let situation - there's an interesting BM product called a House to House which enables you to buy a property that is habitable but not lettable; great product.
    From the lenders perspective if the property has to pay for itself such as a buy to let then they want it rentable day one. So look at it and say could I move a tenant in here?
    Conversely while your answer might be no could you live in it if you had to? Are the services connected, working kitchen and bathroom? That's habitable but you'd never let it so that's not lettable!
    Confused yet?
    Lisa
    Fernando Duzaza said:

    Hello Lisa,

     

    Thank you very much for this.

     

    What is the difference from the lenders eyes in being habitable and lettable? (one for resi the other for BTL?)

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    0

    Lisa All comments are for education and information purposes only and do not construe as advice or a financial promotion. No liability is accepted for comments made. If you wish to receive information in an advisory capacity then please contact me about becoming a client. www.keys-mortgages.com

    Yes confused.com! Lol

     

    I assumed the House to House product was for a BTL, where they didnt look at the rental income, but the property can be un-lettable (if thats a word)?

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    Not specifically buy to let; it's aimed at properties where a monthly rental income isn't derived eg holiday home, second home, property for a child, etc. But you could use it on a B2L where the income doesn't stack and it still made a good purchase for whatever reason.
    Lisa
    Fernando Duzaza said:

    Yes confused.com! Lol

     

    I assumed the House to House product was for a BTL, where they didnt look at the rental income, but the property can be un-lettable (if thats a word)?

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    Lisa All comments are for education and information purposes only and do not construe as advice or a financial promotion. No liability is accepted for comments made. If you wish to receive information in an advisory capacity then please contact me about becoming a client. www.keys-mortgages.com