Buying a refurb project as a BTL

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    Buying a refurb project as a BTL

    Quick question - is it possible to buy a house that needs a complete refurb (but nothing structural or anything major) on a buy to let mortgage? Looking at a house that requires a full refurb to let out. Plan is to refurb straight away after completion and then let out. I know you can do this via bridging loans, but if it can be done by just buytolet mortgage then I would prefer that route to make things simpler and possibly cheaper.

    #2
    There are two types of refurb , light and heavy , the former to perhaps include a redecorates of the property, replacement kitchen & Bathroom but nothing of a structural nature or requiring planning consent.
    Depending on whatisinvolved lenders would ask for a valuation based on the current conditions do another when works have been completed and validated by the surveyor, the initial loan will be based , assuming it could be Let in its current condition, on the PP or valuation whichever is the lower but once the works have been completed the additional monies based on the increased value would be released.

    From my initial research there are four lenders who will work on post works valuations with a possible three who might consider and a further one if you are buying in Wales.

    A Remortgage within the normal 6 months might be permitted where the property has been improved upon and evidence of costs can be shown, the following is an extract from one such lender whose criteria accommodates such Remortgage:-

    “Remortgage within 6 months of the purchase and post refurbishment of a property will be considered up to a maximum of 100% of the purchase price and refurbishment costs of the project provided that the LTV remains within the normal product maximums.
    Breakdown of the works undertaken must be provided to the valuer on instruction for consideration.”

    Comment


      #3
      loanarranger I don’t see anywhere that op is asking about remortgaging after the refurb is completed, although I do understand that most people remortgage once the refurb is complete and maybe that is his intention but he hasn’t mentioned that.
      If op wants to buy with a mortgage, refurb and then let the house is it not just a case of buying with a BTL mortgage, refurb and then let it? Assuming of course that the house is in a lettable condition to start with and only requires modernisation.
      Maybe the best thing would be to buy on a 2 year fixed term and then release additional monies after the two years if needed?

      Comment


        #4
        Thank you for both your replies and my apologies if I did not make my post clearer. The intention is to buy a house and then refurb it and then let it out. The current condition of the house is such that it is not livable in it as the kitchen, carpet etc have been stripped out for whatever reason. It will need to have the refurb before the house is able to be livable and therefore let out.

        Wondering if btl lenders accomodate for such situations or do I need some sort os specialist lending such as bridging finance?

        Comment


          #5
          I can’t give any advice other than it’s unlikely that you’ll get a btl mortgage on a house with no kitchen, I assume the entire house needs re-doing as you said it needs a complete refurb? Hopefully loanarranger will come back with some more advice for you so might also be worth mentioning what percentage of the current value you have as a deposit, how long you think the refurb will take and whether or not you hope to release equity when the refurb is complete

          Comment


            #6
            Any property that is without the basic amenities,I.e a fully functioning bathroom or kitchen is regarded by long term lenders as unmortgageable in its present condition. For such property one can obtain short term bridging finance, the downside is cost and the loan is based on the 180 day ( forced sale) value which is invariably below the Open Market Value.
            BuytoLet investor , the purpose of mentioning the criteria of a Remortgage was to demonstrate criteria where a property has indeed been refurbished and the owner wishes to release equity based on the assumed increase in capital value within the normal six months ownership rule which is exercised by many lenders.

            Comment


              #7
              Thanks a lot for the useful comments and sorry it took a bit of time to get back to you on this. I did view the house and indeed it required a full refurb. All the carpets were removed, kitchen gutted out except for the sink and some dated units and bathroom that had the sink, toilet and bath but needed updating and tiling etc.

              I imagine it would not qualify for a btl mortgage and a bridge loan would be required. Surprisingly there were a number of offers close to the asking price from what i understand to be owner occupiers. It is a lovely area (London suburb) so perhaps not so surprising but given the works, bridging financing etc required I felt there was no point competing with these offers. My search continues!

              Comment

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