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The question of being in lettable condition works in exactly the opposite way to that you you describe, if you are talking about The Mortgage Works. I am nearing the end of a formal complaint process with them, and shall shortly be taking the case to the Ombudsman. They say that being, in their opinion, already in a lettable condition before refurbishment disqualifies a property from a Light Refurbishment mortgage. My arguments with them are, firstly, that this was a concealed criterion when I applied and, secondly, that the property was most definitely NOT of a lettable (or, indeed habitable, standard on purchase. Add to that their claim that the purchase price was fair and that a £15k refurbishment has added no value to the property and you can see why I am far from gruntled. Lisa: We have discussed this elsewhere - have you come across anyone else falling foul of this yet?
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
Hi Lisa,Thanks for your reply to the above.2 Questions: 1]on the further advance is the maximum only 70% of the end value and not 75%?2] How does the Mortgage Works rentention work in reality: so Current value 75k, but purchase price is 70k, other comps worth 100k, how does it work, can you give me an example please like ltv on the pp of 70k then LTV on the 100k?Thanks
Hey LisaThat makes sense: so in reality if the property requires work as above you would only get back the deposit and not the refurb fees on the 70% LTV on the end value. And even as above you got a bigger discount the drawdown is only limited to £25k!So the only way you could do this is try and buy a property already in a lettable conditon say worth £85k on a standard BTL with no ERC, & you negotiated the price to 70k. Comps worth 100k.70% of 70k = 49k Deposit = 21kDo some workRefinance to 75% 6 months later at 75% of 100k = 75k75k - 49 - 21 = 5k cash out which could be part of your refurb cost/legals.Your thoughts are as always welcomed.
Lisa: Have you ever used the LR product on a property that was grotty but arguably in lettable condition pre-refurb, or only on props that were definitely not lettable? Neither I nor my broker ever saw anything to say that a lettable prop would not qualify for it, and their own sales people confirmed that lettability was not an issue (their records of that call are conveniently missing but I have my contemporaneous notes).I'll cheerfully mail you an illustrated report on the before and after refurb condition if you like.I'll start a new thread to ask for people's experiences
I took "would benefit from improvements" to mean that it would benefit from, rather than required the improvements before letting. Did my broker and I miss anything in the criteria last December that says scruffy but lettable (to rotten tenants, I'd imagine) props don't qualify for the LR product? I note that the wording is now "(Property requiring minor improvements prior to letting)" on the 6/10/10 product guide, although TMW claim in their letter to me that there has been no change of wording.This particular property had a sheet of corrugated iron nailed to the living room wall as a hood over the (torn open) fireplace, foul decor and carpets and a pestilential bathroom. I'd have wanted a good wash after taking a bath in there! The kitchen was marginal but filthy and I like my props to be of an exceptionally high standard for the areas where they are. I have therefore redecorated throughout, installed new carpet and ceramic tiles in the kitchen and bathrooms, new kitchen and bathroom, made the wasteland of a garden into a nice low maintenance one, replace aluminium windows with uPVC - exactly what was suggested as a typical light refurbishment, in fact.So even if the criterion is valid the prop was not lettable, as confirmed in a letter by my letting agent. We shall see what the Ombudsman says.