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My client wants finance to over 100% to improve a property and sell it on at a profit – what do you suggest?

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  • 11/12/2001
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Clients usually need to purchase a property on the basis of it being their main residence. If they a...

Clients usually need to purchase a property on the basis of it being their main residence. If they adopt a commercial approach to buying, it it is unlikely they will get such a high level of finance.

Another key element to obtaining 100% LTV is the current state of the property. For a lender to offer finance it needs to be in a good state of repair with basic features such as a kitchen and bathroom.

If the property is to be viewed as the borrower’s main residence, it must be possible for them to live in it. If it needs significant work, the lender is unlikely to release over 100% of the property value immediately ‘ they would release it in parts as renovation is completed.

Your client needs to consider how much they are expecting to make on the property. They need to ensure the renovations will enhance the value significantly over the amount they have borrowed.

Realistically, a borrower would need to retain the property for six to 12 months before selling it, to complete improvements that would add significant value to the property and gain from house price inflation.


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