So after the initial viewing on the Hopbine we talked long and hard about whether we could afford to do this renovation and how we would finance it.
- How much could we afford on mortgage repayments
- How much could we sell our house for
- How much did we need for renovations
- How much could we offer on the Hopbine
- How much did that leave us as a deposit •Who would give us a mortgage for the rest
Firstly we talked to our independent mortgage advisor from Charles Maddison, Pamela Collins-Boon. Her contact details are below. I can honestly say without a shadow of a doubt we could not have done this without her. She has gone far above and beyond. I would highly recommend her, she is the kindest most thorough and helpful person. And you don’t pay her a penny.
Pamela Collins-Boon, Tel: Office 01582 404004 Fax: 01582 420444 Mobile: 07798 904537
She talked us through our options for a mortgage. Now on a conversion most lenders want a year from the date of the registered conversion before they will lend. That was last April so one thing ticked off. That’s for a high street lender.
But high street lenders will only lend on a property that is habitable. That means it has a working kitchen, bathroom, plaster on walls, adequate flooring and electrics and plumbing. Bugger. We had none of the above.
Buildstore – act like a broker to get you the ‘best deal available’ for a renovation project
Norwich and Peterborough – building society offering a limited range of self build / renovation mortgages
There are conditions around these mortgages; you normally need at least 80% loan to value (20% deposit). One of you applying normally needs to earn £30k or sometimes more to secure the mortgage. This is a single applicant. It doesn’t matter if together you earn £50k. One of you needs to earn over £30k. You can borrow on the projected value of the property rather than the purchase price eg you buy for £100k but you will spend £50k on renovations, at the end the property will be worth ££200k. BUT you will definitely get a retention. So money is released to you I stages as you complete works. For example you might get £100k to start with, need to be able to fund some of the renovation work yourself, then get more mortgage money once you’ve completed some works. So you need to have some money in the bank.
The APR on these mortgages is high, you get fixed in and you can do nothing about it as you are limited to who will lend to you, there are few lenders so they hold the power. Interest rates are changing all the time, call for the current rates.
The APR meant we couldn’t afford the repayments on these mortgages so that was out.
We discussed with the builder if we paid an amount would he do some works: the kitchen, electrics, plumbing. But he wouldn’t. Then someone put in an offer, for the asking price. It wasn’t accepted as they didn’t have the proven funding. But now we had to move fast.
One of our first steps was to work out roughly what needed doing and how much that would cost. To do this we took friends in various trades to the pub so we really could get a good idea. We also have a family member who is an architect who came to give the property a once over stating ‘go for it!’ At this point I’d definitely say the more advice and professional opinion you can gain the better position you are in. Don’t sell yourself short or assume anything!
We decided to be in a strong position we needed to be sold so up on the market went 24.
Now we needed to sort how we’d get a mortgage with a high street lender.
Luckily a relative came in to some money and extremely generously said we could borrow it in the short term to exchange on the pub. So we’d exchange, have four weeks until completion and in that time get the house habitable and get the valuation done on the mortgage. Bit dodgy but we felt the risk was worth it.
You only need to hand over your deposit on exchange. So that was the plan, sell our house ASAP, get an offer accepted on the Hopbine, complete on our house so we could give the required deposit, use proof of the relatives money to exchange (but don’t actually use it) then work like a cart horse to get the work done to secure a mortgage before completion so we never actually used the relatives money.
Now we just needed to sell, offer, exchange and get going on the renovation…