Short term Mortgage
Discussion
I've got an opportunity to buy a property from a family member at a very favourable price, around £105k for house that with a little spruce up should re-sell for around £120k.
I'm capeable of doing much of the work myself and havea good understanding of how to budget that work, agents fees for the eventual sale and CGT implications, however my understanding of mortgages is a little more fuzzy.
I'd hope to buy the property with a 15% deposit and the rest on a mortgage, do the required work and sell it on within 6 months. All the mortgages I've looked at appear to have a significant early repayment charge, something in the order of 3% seems standard which would significantly eat into my profit margin. Is there such a thing as a mortgage with a very short term, say around 6 months and if not is there any other way to get around this problem?
I'm capeable of doing much of the work myself and havea good understanding of how to budget that work, agents fees for the eventual sale and CGT implications, however my understanding of mortgages is a little more fuzzy.
I'd hope to buy the property with a 15% deposit and the rest on a mortgage, do the required work and sell it on within 6 months. All the mortgages I've looked at appear to have a significant early repayment charge, something in the order of 3% seems standard which would significantly eat into my profit margin. Is there such a thing as a mortgage with a very short term, say around 6 months and if not is there any other way to get around this problem?
JWH said:
I've got an opportunity to buy a property from a family member at a very favourable price, around £105k for house that with a little spruce up should re-sell for around £120k.
I'm capeable of doing much of the work myself and havea good understanding of how to budget that work, agents fees for the eventual sale and CGT implications, however my understanding of mortgages is a little more fuzzy.
I'd hope to buy the property with a 15% deposit and the rest on a mortgage, do the required work and sell it on within 6 months. All the mortgages I've looked at appear to have a significant early repayment charge, something in the order of 3% seems standard which would significantly eat into my profit margin. Is there such a thing as a mortgage with a very short term, say around 6 months and if not is there any other way to get around this problem?
Yes, a mortgage with no ERC's. I'm capeable of doing much of the work myself and havea good understanding of how to budget that work, agents fees for the eventual sale and CGT implications, however my understanding of mortgages is a little more fuzzy.
I'd hope to buy the property with a 15% deposit and the rest on a mortgage, do the required work and sell it on within 6 months. All the mortgages I've looked at appear to have a significant early repayment charge, something in the order of 3% seems standard which would significantly eat into my profit margin. Is there such a thing as a mortgage with a very short term, say around 6 months and if not is there any other way to get around this problem?
Try looking at Tracker based mortgages, HSBC do one with no ERCs for instance.
This is not a recommendation of a product. Your home is at risk if you do not keep up repayments. Other music devices are available. No animals were harmed in the making of this post. Try the veal, tip your waitress.
I take it you have priced this up properly?
Buying at £105k for a house you expect to value up at £120k leaves £15k providing you actually sell at £120k Most buyers will chip you a few thousand or possibly more in this market?
What level of work do you need to do? Is it only a lick of paint? If not tiling, kitchen, bathrooms, carpets??
By the time you have paid the solicitor fees once to purchase and once to sell, the estate agents to sell it for you, mortgage arrangement fee, mortgage repayments for as long as you own the property, council tax for the place if its been empty for a while or you cant prove to the council that it is not habitable. Insurance for the place whilst you own it, the lender would want to see that in place, and most insurance companies get twitchy if a place is left empty.
I am sure if you have added the costs up then it will still be worthwhile for you but be sure about the resale price and what you may have to drop etc
Good luck
Buying at £105k for a house you expect to value up at £120k leaves £15k providing you actually sell at £120k Most buyers will chip you a few thousand or possibly more in this market?
What level of work do you need to do? Is it only a lick of paint? If not tiling, kitchen, bathrooms, carpets??
By the time you have paid the solicitor fees once to purchase and once to sell, the estate agents to sell it for you, mortgage arrangement fee, mortgage repayments for as long as you own the property, council tax for the place if its been empty for a while or you cant prove to the council that it is not habitable. Insurance for the place whilst you own it, the lender would want to see that in place, and most insurance companies get twitchy if a place is left empty.
I am sure if you have added the costs up then it will still be worthwhile for you but be sure about the resale price and what you may have to drop etc
Good luck
2 5HAN said:
I take it you have priced this up properly?
Buying at £105k for a house you expect to value up at £120k leaves £15k providing you actually sell at £120k Most buyers will chip you a few thousand or possibly more in this market?
What level of work do you need to do? Is it only a lick of paint? If not tiling, kitchen, bathrooms, carpets??
By the time you have paid the solicitor fees once to purchase and once to sell, the estate agents to sell it for you, mortgage arrangement fee, mortgage repayments for as long as you own the property, council tax for the place if its been empty for a while or you cant prove to the council that it is not habitable. Insurance for the place whilst you own it, the lender would want to see that in place, and most insurance companies get twitchy if a place is left empty.
I am sure if you have added the costs up then it will still be worthwhile for you but be sure about the resale price and what you may have to drop etc
Good luck
+1 Buying at £105k for a house you expect to value up at £120k leaves £15k providing you actually sell at £120k Most buyers will chip you a few thousand or possibly more in this market?
What level of work do you need to do? Is it only a lick of paint? If not tiling, kitchen, bathrooms, carpets??
By the time you have paid the solicitor fees once to purchase and once to sell, the estate agents to sell it for you, mortgage arrangement fee, mortgage repayments for as long as you own the property, council tax for the place if its been empty for a while or you cant prove to the council that it is not habitable. Insurance for the place whilst you own it, the lender would want to see that in place, and most insurance companies get twitchy if a place is left empty.
I am sure if you have added the costs up then it will still be worthwhile for you but be sure about the resale price and what you may have to drop etc
Good luck
Theres no money in it at the figures given, 15k paper "profit" before any costs or materials is going to work out as very little or a loss if it doesn't sell quickly or for what you want.
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