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Mortgage for barn conversion - complicated circumstances

Last post Wed, Jul 15 2009, 6:03 PM by mumbler. 3 replies.
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  •  Fri, Jul 03 2009, 3:29 PM

    Mortgage for barn conversion - complicated circumstances

    Im hoping that someone here can tell me if this is possible and how best to go about it.

    Myself and my partner are both IT contractors working through seperate LTD companies,he has 3 years accounts and I have 2 - income is approx 50k each per annum.

    He has a flat with around 75k equity, realising 45k of this this would leave him with a 75%LTV (i think)I have a flat with approx 0-20k equity - we are both due to come off trackers in Sept and go onto SVR'sand we both have good credit history and no other debt.

    We would like to jointly buy a barn that has all planning permissions in place for 380,000to do this we'd like to release 45k of equity in my partner's flat and then rent it out. It's in East Londonand not to far from Stratford so we'd like to hang onto it, renting would cover the new 75% LTV mortgage.

    Im considering selling my flat if that would free up 20k if that doesnt work (market etc) then i could rent it to cover the existing mortgage. I could hopefully still raise 20k to put towards the barn and by living on site both of our wages wouldgo towards the new property.

    We'd then have 65k to put towards the initial purchase and hoping to get a mortgage of 85% LTV the few k left over would go towards fees / stamp duty. (barn conversion building costs are excluded here)

    Does this sound feasible? we may be able to raise a larger deposit but not counting on it.

    Thanks for any advice.

    • Post Points: 20
  •  Fri, Jul 03 2009, 4:34 PM

    Re: Mortgage for barn conversion - complicated circumstances

    hello

    A cople of thoughts on this:

    One is that the financial services partners of umbrella outfits like Parasol are understanding about contractors income and may be able to help with a conventional mortgage. Have a look for Contractor Financials Ltd. I've not used them, so buyer beware and all that.

    Next thought is that, assuming the barn is not yet converted, you are likely to have some problems through a conventional mortgage company. Best to try Buildstore I would think. They helped me some years ago to get a mortgage on an unconverted barn. Their details are on the web, or in one of the self build magazines like Homebuilding and Renovating in WH Stiffs. The Buildstore people have a desk in the self build exhibition place in Swindon. Otherwise they are Scotland based and you have to do everything over the phone.

    Lastly.. Not wanting to dampen any enthusiasm, but from my experience a barn conversion is fraught with snags. My architect went over budget by 2 pi, and I had built 6 houses before this so had a bit of experience. If it would help to type some more about this, do please reply.

    all the best

    mumbler

    • Post Points: 20
  •  Fri, Jul 03 2009, 5:02 PM

    Re: Mortgage for barn conversion - complicated circumstances

    Thanks for the reply Mumbler, both of our existing mortgages were raised through brokers used to dealing with IT contractors, but mine was still quite tricky - I had 2 high street lenders back out after AIP and in one case after the survey had been done and I'd paid the fees! thankfully the Halifax came through with their tracker deal and I got my money back from the W.

    Thanks for the Buildstore tip - the barn isnt yet converted, we will probably end up living onsite in a tent/shed/caravan for quite a while.

    Anything more you can tell us about your experience would be very useful, things which you would have done differently with hindsight? or books/websites you'd recommend? - many thanks.

    • Post Points: 20
  •  Wed, Jul 15 2009, 6:03 PM

    Re: Mortgage for barn conversion - complicated circumstances

    hello again

    Apologies for the delayed response.

    I learned a lot on this recent one and also on previous building conversions, and I'd be happy to share the info.

    It's obvious, but it helps to do it as quickly as possible. Keeping up the momentum is crucial I think. While one can go without a lot of things for a short time, coping with a shed or a tent for quite a while could be a strain on health and wellbeing, even on relationships (in my experience).

    If you have space for it, consider getting hold of a residential caravan to live in. Better than camping and life is better with a shower. Not so expensive, and in essex probably many sources. Ebay is good for purchase and transport. You will need permission from the council, but they will often tolerate this for a limited period on a self build. I would ask for a year's worth of permission or maybe two. That has the benefit too of giving an end point to the project. The barn *has* to be ready before the caravan permission expires.

    Budget, and staying on it, is obvious too. Its amazing how much services connections cost - they are monopolies and charge what they want. I saved a lot by getting a road worker with a licence to make the drain connections. The water board may use the same man but will charge you 5k extra on top. In hindsight I would make the connections first. Even electric to the caravan or portacabin. My generator exhausted the patience of the neighbours.

    I would not use a quantity surveyor again. Complete waste of space, although he may have been useful for bank negotiations. Perhaps mine was just bad, but I would be careful.

    Likewise for architects. Be very careful. The intern on my job was better than all the qualified ones.

    If you can plan to do the barn in a short time, the best investment in my view would be a retired builder to be clerk of works. He would keep an eye on deliveries, keep any subbies in line, stop thieving from site, and would be your resident expert. Worth the proverbial weight in gold. My last place I did without, but never would again.

    Besides these things, I would focus on the project plan and the budget. If you have MS project it will help. I would get the planning and budgeting book by Brinkley. Can't recall the exact title. If you are in London go to the Building Centre in Store St, off Tott Ct Rd, where they have the biggest collection of building books for sale, and they tolerate a bit of browsing.

    For my next project I would design things so that a self-contained part of the building could be finished quickly, just an annexe really, done with cheap fittings but finished and painted, and cleared up and tidy outside. Then would do the rest later with good people and good materials, when the finances have recovered a bit.

    Besides the debt and the cold, the most depressing thing about self building is living with mud and trenches and rubble.

    All the best with your project.

    mumbler

    • Post Points: 5