Good news for those of you looking to boost your property portfolio as The Mortgage Works weighs into the market with a Light Refurbishment product specifically targeting the type of ‘tired' or ‘run-down' property that regularly appear at auction.
Offering the client 70% of the purchase price on day 1, the lender then gives you 3 months to add value, by way of refurbishment, to both the end value and the rental value to allow you to then access 70% of the new figure.
The surveyors will be instructed to consult with the client on the initial appointment and they will then in consultation with the buyer, give a final valuation figure of the revamped property. This money is then effectively kept on retention by the Bank until the valuer is satisfied that the work completed has meant the property has reached its potential via a re-inspection appointment.
The clue is in the title in that it means light refurbishment (i.e. new kitchen/bathroom, redecorating, general TLC) rather than actually developing the property i.e. extensions or demolishing of walls. However this is the first such product post-crunch and again bodes well for the market as lenders look to diversify their products for 2010. Up until now such properties could only really be purchased on bridging loans/revolving credit facilities and then re-mortgaged 6 months later to release equity.
It's ideally suited to a repossession property which might have utilities disconnected and be in a bad state of repair, which are normally very difficult to finance, or can only be financed at lower loan to values and opens up a huge amount of opportunities which would have been difficult to exploit.
Details direct from the lender are listed below, but with rates starting as low as 4.04% we expect them to be very popular.
These products will enable your client to purchase properties in need of some improvement, carry out the works, potentially increasing the value of the property and rental income. Giving your clients the opportunity to maximise their investment - simply common sense.
Key criteria for products
- Light refurbishment - classified as a Buy to Let rental property which will benefit from minor improvement's such as a new kitchen or bathroom
- A retention amount up to a maximum of £25,000 will be released on completion of the works, subject to acceptable re-inspection by the valuer
- Improvement work to be carried out within 3 months of completion and prior to letting out
- Products available up to 70% LTV
Please contact enness capital for more details
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