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  • Buy-to-Let

    Property Down Valued by Virgin Money

    We are looking at purchasing a 2 bed terraced property in Bolton for 40k. Just got the valuation report back from Virgin Money. The valuer has said that the property is uninhabitable because it has some damp, needs redecorating and needs a new bathroom. I agree on all three counts; but the damp is not too bad, the decor is old fashioned but not horendous, and the bathroom is old but fully functional. We intend to sort out all three issues none of which make the property "uninhabitable".

    They want to retain 100% of the mortgage until the work is done. So, unless we can find another lender, it would appear that the only way out is to buy it for cash. Unless that is anyone out there can come up with a better idea.
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    First thought is, a bridging loan, I believe PT have an offering in that vein.

    Second thought is negotiate exchange with delayed completion, with access to do the work granted in between. I'm no expert on this, but I've read it can sometimes be done if the vendor is incentivised.

    But then my third thought was, if purchase price is £40K, doesn't the average 75% LTV loan of £30k fall well below the minimum loan criterion of just about every BTL lender?
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    (07-10-2014 03:43 PM)andrewclement Wrote:  First thought is, a bridging loan, I believe PT have an offering in that vein.

    Second thought is negotiate exchange with delayed completion, with access to do the work granted in between. I'm no expert on this, but I've read it can sometimes be done if the vendor is incentivised.

    But then my third thought was, if purchase price is £40K, doesn't the average 75% LTV loan of £30k fall well below the minimum loan criterion of just about every BTL lender?

    Your thoughts of minimum loans (and property values) are very valid in this case. Many lenders (mortgage, as well as bridging finance) have minimum value requirements of £75k, with some at £50k and a couple (not only Virgin Money) at £40k.

    The valuers "uninhabitable" comment is based on "would a tenant actually like to live there with the property in that state?" irrespective of whether it can be redecorated, repaired, refurb'd etc.

    The lenders always consider worst case scenario of repossessions and how quick they can get their money back by way of sale and so will always want a property to be habitable at all times.

    With regards to arranging finance in this case, either cash (if available) or raising capital against other assets (if feasible)?
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    At least you will not have to wait for 6 months before being able to a mortgage on it unlike a normal buy for cash.

    What proof will they want that the damp has been sorted out?
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