Uninhabitable property gives buyers nightmares

by | Monday 17th Jan 2022 | Mortgage Case Studies

Uninhabitable property being renovated

Key features:                  

Clients wanted to sell their current property and buy their dream home for £2.65M in Oxford. ‘Dream Home’ was uninhabitable and needed major structural and cosmetical work carried out before the family could move in.

With the property being uninhabitable, the mortgage lender wouldn’t lend the amount they needed until the work had been carried out.

Our client:

Our clients owned a residential property that they would be selling to try and purchase their dream home. Unfortunately, the new property needed a major upheaval to make it liveable for the clients and their family.

Our client’s intention was to sell their current property and use the equity to fund the remodelling of the new home however, the high street mortgage lenders would not lend on the new property while it needed work so unable to get a mortgage on the new property and with a house to sell, they came to Oportfolio for help.

How did we help?

Our advisor took time to talk to our clients and understand the situation thoroughly. With a clear picture of what was happening, our advisor concluded that the best route forward was for the clients to secure a bridging loan on the new property. A bridging loan is a short-term loan that can be taken out on a property to bridge the gap until they can secure a standard mortgage.

We referred our clients to bridging lender who offered them a bridging loan in no time which allowed them to purchase the new property. When their original property sold the clients used the equity to complete the necessary work on the new home. This took 6 months to complete, and the bridging lender was more than happy to accommodate this.

When the work had been completed and the family could now live in the new property, we looked at the client’s strategy for exiting the bridging loan for them. With the home now in a suitable and mortgageable condition, we arranged a remortgage with a high street bank. The funds from the remortgages were used to repay the bridging loan and the clients now have a liveable property and the best possible mortgage product available.

What was the rate?         

The loan was secured as part interest only and part capital repayment, both of which had a 0.89% variable rate until 02/12/2023, and after the fixed period, they would revert to the bank’s 3.54% standard variable rate.

The overall cost for comparison is 3.3% APRC. The arrangement fee was £999, and early repayment charges were applied. The mortgage term was 23 years.

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