To Mortgage or not to Mortgage!!!

[eamonheggarty 14]

Hi All, 

Would appreciate some advice on a BLT im currently about to proceed with. I know there will be differing views on this however im just looking to see what you all think of the below: (Note as its situated above a pub ,lending has been incredibly hard to get and Covid has de risked all banks by the looks of it) 

Glasgow, 2 bed flat, City center. 

Value = £150k

Purchaser Price = £128k @ 75% LTV

Renovation costs £9k 

End value = £175k

Mortgage = 3 Year fix @ 4.64% = £360ish/ month mortgage 

STA Rent £850/month,  Air B&B £1600>£2600 conservative 

 Question: Would you walk away from this deal due to the mortgage rate being terrible. Plan is to refinance in 1/2 years when the banks are back to normal (hoepfully).

Thanks,

Eamon

[Stuart Phillips 235]

I dont know how to answer whether you should or should not walk away.

I think you should assume that a) this will always be tough to mortgage, you would have had a small subset of semi commercial lenders even a year or two ago. b) Rates will continue on a gradual upward trend for the foreseable future. If it doesent work for you now because of the cost of finance, i dont see things getting easier in a few years.

On the flip side, AirBnB is interesting. With an uptick in staycations, and an exodus from city centres by both young professionals and businesses, our cities may look quite different in 5-10 years. I wouldnt live above one, but i'd happily spend a weekend above one if it were in a cool part if town. Im worried however though that if AirBnB makes property more unaffordable for locals, the government may step in, much like Osbornes tax overhaul did. If holiday lets become the "next big thing" how long until they become oversaturated and a correction is needed?

[mara escalante 0]

If it was so difficult for you to find a lender for a property above a pub (I've tried in the past with no luck) it could be very difficult to sell it in the future if you have to.