Buying A House That Needs Work Mortgage
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Require a loan to fund a purchase and refurbishment of a property? Contact us today on 0117 313 7780 or complete our call back request form.
There are plenty of reasons why you may want to purchase a house that is in need of repair, whether it is because of the invitingly low purchase price or the opportunity to shape the property in your own way, you will likely need property finance.
To secure the finance you need to purchase the home that needs work, you may feel the need to approach a traditional lender (unless you have sold your existing or have a significant amount of capital). The issue with traditional lenders is that applications for finance may take up to several months, which could cause delays and result in missed opportunities.
Bridging Loans for House Purchase
If you need to purchase a house that needs work and time is short, then you may want to explore your bridging loan options.
A Bridging loan is a type fast, short term finance that can provide a significant amount of money in a small amount of time.
Bridging loan lenders require an exit plan to be in place before providing the finance. An exit plan is the method that the borrower intends to use to repay the loan. An example of an exit plan is when the borrower sells their existing property.
When selecting the type of finance that you need for your project, it is important to consider what type of refurbishment your property requires.
Light Refurbishment Loans
These loans are specifically suited to smaller projects and are appropriate for refurbishments where:
- No planning permission is required
- The building regulations do not apply
- There isn’t a change to the nature of the premises
- It is a non-structural refurbishment
- The cost of the project is below 15% of the value of the property
This type of loan would be best suited to use for work that changes the aesthetics of the interior of a property.
Heavy Refurbishment Loan
These loans are ideal for larger projects where:
- The cost of the project is above 15% of the value of the property
- Planning permission is required
- Building regulations do apply
This type of loan could be used for extensions, loft conversations, structural amendments and change of use.
If you are looking to buy a house that needs work then Fair Mortgages may be able to help. Depending on the type of refurbishment, Fair Mortgages can arrange a variety of refurbishment finance including:
- First Charge: Stretch senior development finance is a first charge debt that may provide up to 100% of the development costs and up to 75% of the gross development value.
- Second Charge: A common second charge debt is a mezzanine loan. Mezzanine loans bridge the gap between the borrowers’ savings or capital and the first charge debt.
It is important to note that first and second charge mortgage lenders are reluctant to lend to those without experience in refurbishment evidenced by a property portfolio.
If you do not have the necessary experience to secure the right finance, you may benefit from entering a joint venture. This is where you pool your resources with an experienced developer to obtain the funding that you need to complete your refurbishment.
How to Get Finance for Buying a House That Needs Work
Securing both the perfect funding for a purchase of a property and property refurbishment is integral. But unless you have a deep understanding of the financial services market, it may be difficult to get the most suitable funding for your project.
Our independent whole of market refurbishment mortgage team can help you to locate the right property development mortgage deal for you. Call us today on 0117 332 3389 or alternatively, complete our call back request form.