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Is this financing too aggressive?


arjunb

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Hi everyone,

I’ve got an SPV set up & it has no properties in it. I have no investment properties but do own my own home.

I have two offers accepted on properties I hope to use for BTL. One has a tenant in situ and the other doesn’t & requires work.

Would it be difficult to get two BTL mortgages in a company with a new investor and then afterwards for the investor to get a personal loan for the refurbishments? I have the deposit for both properties but no money left to refurb the second property described above.

cheers!

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If the second one requires refurbishment, you're unlikely to be able to get a mortgage on it - the lender would expect it to be in a lettable condition, so would depend what needs doing. If you are just thinking of raising the quality to increase the rent, then it should be ok as long as you don't then try and remortgage. If it's in a poor condition, the EPC is below E etc, they wouldn't lend using a straight BTL mortgage.

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Hi

I wouldn‘t personally want to start out having two transactions going through at once but that is personal preference. How confident are you on the refurb costs? That is one area that is very difficult to estimate correctly when you are starting out so be careful there. I know there are lender out there who provide refurbishment finance so perhaps you could try a broker first.

Just make sure you aren't running your refurb on fumes and have some reserves in case it runs over.

Good luck

David M Slater ACMA 

Accufy Accounting  - Proactive accounting for property investors 

0208 242 4926    info@accufy.uk

 

 

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For the property with a tenant, a mortgage should be simple as you know what the rent is.

For the property that needs a refurb, it has to be habitable for a mortgage lender to lend against it. As long as it's possible to live inside it, you'll be able to get a mortgage

A personal loan would depend on your circumstances. How high is you debt? Do you have a large salary?

You could get a balance transfer BEFORE you start the refurb. Put the refurb costs on you credit card, and then transfer to a balance transfer card

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Vin Gupta
Property Investor and Developer
UK Property Blog: https://evolutionblogger.com/article/uk-property-articles
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Thank you all for your replies!

On 12/10/2020 at 2:58 PM, dino v said:

If the second one requires refurbishment, you're unlikely to be able to get a mortgage on it - the lender would expect it to be in a lettable condition, so would depend what needs doing. If you are just thinking of raising the quality to increase the rent, then it should be ok as long as you don't then try and remortgage. If it's in a poor condition, the EPC is below E etc, they wouldn't lend using a straight BTL mortgage.

second one requires cosmetic refurbishment only. It will be able to get a mortgage. Wouldn’t be interested in remortgaging because I will probably just remortgage after two years & the refurb probably won’t add enough value to make remortgaging worth it.

On 12/10/2020 at 6:02 PM, david slater said:

Hi

I wouldn‘t personally want to start out having two transactions going through at once but that is personal preference. How confident are you on the refurb costs? That is one area that is very difficult to estimate correctly when you are starting out so be careful there. I know there are lender out there who provide refurbishment finance so perhaps you could try a broker first.

Just make sure you aren't running your refurb on fumes and have some reserves in case it runs over.

Good luck

Refurb costs will be £10k I think. In terms of the financing of the mortgage interest, the tenanted property will easily pay for the mortgage interest of the property to be refurbished. Or indeed, I expect to have enough spare money each money to pay for it myself. For the personal loan, I will try to set the lowest monthly repayment possible with the lowest interest rate.

4 hours ago, EvolutionBlogger said:

For the property with a tenant, a mortgage should be simple as you know what the rent is.

For the property that needs a refurb, it has to be habitable for a mortgage lender to lend against it. As long as it's possible to live inside it, you'll be able to get a mortgage

A personal loan would depend on your circumstances. How high is you debt? Do you have a large salary?

You could get a balance transfer BEFORE you start the refurb. Put the refurb costs on you credit card, and then transfer to a balance transfer card

Property to be refurbished is mortgageable. Re debt, I have no debt other than my mortgage. Luckily, my salary is fairly high for my age. Great idea re the balance transfer card though!

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