Mortgage on a “Doer Upper”

[deebouchie]

So there’s a derelict house in a town down the country that I’m looking at .. could probably pick it up for €120k

Would need another €100k to make it liveable.

My question is on the 70k derelict home grant.. do banks take that into account when you go for a mortgage?

My understanding is that you have to spend the 70k first and claim it back..

Are they two separate loans I’d need?
I.e
1) Buy the property (let’s say €100k loan)
2) Refurb works (€100k loan) - the hope would be that a 70k lump sum can be paid down once received from the authorities

 

[rochelle]

@deebouchie I found it absolutely impossible to get a mortgage on a fixer upper. (Kitchen had been ripped out, bathroom needed to be ripped out and boiler had been removed).

Couldn't get a bank to mortgage it because it wasn't habitable.

This was before the vacant home grants.

Far as I can see they only work for people that are cash rich and can buy without a mortgage. (The very people that don't need the grant in the first place).

 

[deborahwilson538]

@deebouchie As far as a gather it makes no difference.

You can't get the grant unless you own the property and there is a lot of hurdles to jump before you get it so mortgage suppliers are very hesitant as there are no guarantees even after approval.

The grant was supposed to be aimed to allow people to get fixer uppers but there are no financial tools available to get a mortgage and rebuild costs on derelict buildings.

So the grant has turned into anyone who can buy a derelict property in cash and rebuild it with cash and then claim back.

The grant sounds good but helps very few people, mostly people who can fund everything up front.

 

[mrluther]

@deebouchie Your first issue is getting the bank to approve the mortgage for the house. It is a risk to them as it is to you so I would say that is the first hurdle to cross.

With the home grant, . you must get all the quotes first, and submit them to the council, they approve the quotes based on inspection, You pay for the works upfront and then they will re-inspect and will only refund you based on the completed quotes/works.

There is a charge set on the house/mortgage too that if you sell it within 10 years, you have to refund the council in full. The bank/mortgage provider is aware as all document goes through them for approval (there shouldn't be any issues).

You would want a separate loan with early repayment available to you so that when the 70k comes in, it can be taken off the loan straight away.

it will take about 100 hours of paperwork and getting quotes, sorting out with banks, solicitors, and loan applications to be paid back 70K is worth it.

The best advice is to start looking into the grant, there are some limitations in where or how much can be spent per category but also if you need planning permission it can delay things.