How to Find Houses That Need Renovation
Looking for a house to renovate? In this article, we cover how to find houses that need renovation, getting a mortgage, and the expenses involved.
Finding Houses That Need Renovation
If you are looking for a property to renovate in the area you live in then it’s a good idea to visit your local estate agents. Your local estate agents will of course have details about properties for sale in your area, including properties that require renovation.
Another way is via our exclusive property renovation list that you can subscribe to. Each week you will receive our list that includes the latest bargain property renovation and modernisation projects, including below market value properties and properties up for auction.
These renovation opportunities include all price points and are arranged geographically to enable you to easily find properties in certain locations.
View the list here – Property Renovation List
Getting a Mortgage
If when buying a property you need to get a mortgage the amount of renovation work required cannot be too extreme because the mortgage company will want to be sure that the property can be let out immediately.
For example, if the property is subsiding or needs the roof replacing you will not get a mortgage. However, if we are only talking about relatively minor renovation work then you should be fine. You may even have big plans for the property such as an extension or removal of certain walls, these should also not prevent you from getting a mortgage.
Buy To Let Mortgage
The best kind of mortgage for a property that you intend to renovate and then rent out or sell is an “interest only” buy to let mortgage from a company such as The Mortgage Works (TMW). TMW are the buy to let arm of the Nationwide Building Society.
An “interest only” mortgage is, as the name implies, a mortgage where you only pay interest on the money borrowed. This obviously leads to a smaller monthly mortgage payment and therefore you are more likely to make a good profit when you rent the property out.
It is also far easier to get an interest only mortgage as lenders such as TMW are (currently) only concerned that the rent you will be able to obtain for the property will easily cover the monthly mortgage payment (usually 125% of the monthly mortgage payment). They are not so concerned about your personal circumstances with regard to income and expenses. Having said that, they will usually want to see an income of some sort.
In some cases, it is possible to get a mortgage that covers both the cost of the property and the cost of the required work.
The interest rate for refurbishment mortgages is higher than for a normal buy to let mortgage – at the time of writing around 5% seems to be common, but that could be higher depending on the amount of refurbishment and renovation work required.
Refurbishment mortgages are specialist mortgages and more complicated than a normal mortgage. In our opinion, especially if you are looking to carry out your first property renovation, it is far better to stick with a buy to let mortgage.
Unfortunately, you are going to need some money to get started. Typically for the deposit, you will need around 25% of the property’s price. You will also need money to carry out the renovation work needed.
The amount of renovation work that you carry out will depend on the budget you have available for the deposit and the renovation work needed. Plan your budget rigorously and choose your property carefully before committing yourself.
You may also want to pay for a full structural survey first so that you are aware of any problems with the property and are able to make informed decisions about where to spend your budget. These usually cost between £500 – £1500.
You should now have an understanding of the basic principles needed in order to take the first steps towards your property renovation project. Remember research is key to minimise risk as much as possible before starting out.
What’s holding you back from getting your own property to renovate? Let us know in the comments below.