15 November 2018
Looking at a property project? Refurb to Let...
Looking for a property project? Just because a property is run down or even classed as 'uninhabitable', does not mean you cannot get a mortgage on it. Or, if you are intending to purchase a property to let out, but it's currently in an 'unlettable' condition. Lenders will cater for these scenarios (dependant on the exact type of works required!). In the main, the work required needs to be cosmetic - a redecoration, maybe a new kitchen or bathroom. Many now offer 'refurbishment' loans where the work must be carried out within a period of time after purchasing the property (normally three months).
Our good friends at Precise Mortgages have recently launched a product called the ‘refurb to let’. This gives the flexibility of a bridging loan to carry out the works, and the certainty that the property will then go on to a buy to let mortgage once works are finished. They will look at 75% of the property value at the outset and allow a re-mortgage up to 80% of the end value, once works have been completed. The nice thing with this product is you have one processor to cover both parts of the underwriting, as well as just one surveyor to review the upfront property value and then again once the works are done. No mortgage repayments are required whilst the works are being completed, subject to terms and conditions of course!
There are a raft of reasons why this type of product might be taken. These could include properties needing work to meet minimum Buy to Let EPC ratings. Or properties purchased at auction, that need work, or where they’ve been bought under value. Or it could simply be a landlord choosing to refurbish the property to maximise the rental yield available.
Seek out a local architect to assist you with plans and costs and always make sure you set out your budgets from the outset.
Lenders will cater for all types of scenarios (dependent on the exact type of works required!). Each lender will work on the surveyors comments once they have visited the property and adjust their offerings accordingly. Just because the high street or your current lender says no, does not mean that it can't be done..