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Developing - Mortgage??

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  • 28-03-2006 12:35pm
    #1
    oneillk
    Registered Users Posts: 100 ✭✭


    Hi,
    Just wondering if anyone could help me with this.

    I have seen a deralict farmhouse property in the country for sale which i believe would be a good property to renovate and sell on after. The current asking price is 120k whichh is not to bad, i believe this could be turned into a 3/4 bed house and resold at approx 240-270k.
    Here is the thing, if i apply for a mortgage, all i will get is 85% of the purchase price- Where do i get the 60-70k for renovations?

    Can i get a mortgage/loan for 120k plus 70k for the works.i.e 190k mortgage on a property valued at 120k.

    Hope thats clear, anyone got any info?

    cheers


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    #2
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    Given the nature of your proposal- it does not fit comfortably under the usual criteria which would attach to assets being mortgaged. I would suggest a term loan. The interest rate will probably be between 6 and 7% as opposed to 3.5% (ish) for a mortgage. This reflects the short term nature of the product- i.e. the limited window of opportunity for the bank to make its money. To maximise benefits for yourself it would probably make sense to maximise the mortgage at the lower rate. Some institutions may be willing to offer mortgages in excess of 100%.


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    #3
    Victor
    Registered Users Posts: 78,392 ✭✭✭✭Victor


    Bansk understand the situation and are happy to give you a loan to include the amount for renovations. Essentially, they will give you the €150,000 whent he property is worth €150,000 and another €50,000 when it is worth €200,000. Depending on your standing with the bank, they may allow you some leeway. You can then work this finance with a term loan or overdraft.

    The bank will want a sound business plan and someone to sign off on the payments - an engineer or surveyor.

    What are you basing the renovations figure on? Are you likely to get planning permission? What is the likelyhood of the council resticting who lives there, thereby preventing you from selling on?


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