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Mortgaging a derelict house

  • 15-04-2020 1:15am
    #1
    [Deleted User]
    Posts: 14,344 ✭✭✭✭


    Folks, I wasn't sure if this belonged here or in the banking forum, but I'm wondering if anyone can throw any advice out to me here.


    I know that when it comes to buying an old wreck, the 'cash is king' saying is very much true. However, I'm wondering is there any such thing as getting a mortgage or secured loan (ie; a reduced interest rate VS a normal unsecured loan) on property that may not be considered 'habitable'?






    I've been looking at old properties that are in tatters for a long time now. I currently owe money on my current house and the circumstances surrounding my purchasing of that house make it tricky to re-mortgage it or put it up as collateral against a new loan, which complicates things, obviously.




    Has anyone approached a bank about this and gotten anywhere with it beyond applying for a normal personal loan (with the nearly 7% interest I can see from BOI). I presume there must be some level of offering a secured loan on a property, as the property, despite it's poor condition, is still worth something and could be sold should I decide to not bother repaying the loan?


Comments

  • #2
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,278 Mod ✭✭✭✭The_Conductor


    In general- you can only get a residential mortgage on a property if the property is considered to be 'habitable'.
    If you can't even decide whether or not to repay the loan- I'd seriously question why you're even considering buying the derelict property.
    7% interest on a personal loan- in general- would not be a deal breaker for someone taking a punt such as you're outlining- providing the outlay is something you can afford to loose if it goes south, which it very well might do.

    The era of people getting a deal on a 'doer-upper', putting a bit of time and money into it, and flipping it- was 15 years ago. Up until recently it was clear that you would not get back any investment you might put into a derelict property through an increase in its price- there were a lot of people willing to buy completely unsuitable property purely to get out of the rental market.

    In the current context- I'd seriously question a proposal such as yours- unless there is something in the transaction that you haven't conveyed that seriously sweetens the pot from your perspective.


  • #3
    [Deleted User]
    Posts: 7,499 ✭✭✭[Deleted User]


    EBS will or a did offer these type of mortgages.


  • #4
    lomb
    Registered Users Posts: 6,031 ✭✭✭lomb


    BrownFinger wrote: »
    EBS will or a did offer these type of mortgages.

    No reason you couldn't get a self build mortgage on one of these also from another source


  • #5
    [Deleted User]
    Posts: 14,344 ✭✭✭✭[Deleted User]


    The_Conductor wrote: »
    If you can't even decide whether or not to repay the loan- I'd seriously question why you're even considering buying the derelict property.


    Just for clarity on this, I meant from a bank's perspective. If I decide 'feck you, I'm not paying' they have something they can take. Obviously from my perspective I'd be intending to complete the loan and wholly own the property.
    7% interest on a personal loan- in general- would not be a deal breaker for someone taking a punt such as you're outlining- providing the outlay is something you can afford to loose if it goes south, which it very well might do.

    The era of people getting a deal on a 'doer-upper', putting a bit of time and money into it, and flipping it- was 15 years ago. Up until recently it was clear that you would not get back any investment you might put into a derelict property through an increase in its price- there were a lot of people willing to buy completely unsuitable property purely to get out of the rental market.

    In the current context- I'd seriously question a proposal such as yours- unless there is something in the transaction that you haven't conveyed that seriously sweetens the pot from your perspective.


    7% Seems high when you take into consideration the amount involved. For argument sake, if you got a loan of 50k, at 7% your cost to borrow is about €15k (over 8 years). Dunno, just seems a tad high to me, personally. Especially if you consider a "normal" mortgage can be had for less than 3% these days, with cashback offers, etc aswell.

    Personally, for me it's not a 'flip it' idea; the plan is to buy somewhere rural and quiet, take on the DIY element as best I can, and over a period of a few years, move there and make it my primary residence.

    It's just realistically financing the purchase of it that is tricky for me. I make about 35k per year, and owe about 55k on my current property (market value of about 170k). However, current property purchase was from a council, so it can't be used as collateral against another house.


  • #6
    Claw Hammer
    Registered Users Posts: 6,153 ✭✭✭Claw Hammer


    Deleted User wrote: »
    J
    It's just realistically financing the purchase of it that is tricky for me. I make about 35k per year, and owe about 55k on my current property (market value of about 170k). However, current property purchase was from a council, so it can't be used as collateral against another house.

    Don't try running until you can walk!


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  • #7
    Eric Cartman
    Registered Users Posts: 26,283 ✭✭✭✭Eric Cartman


    The_Conductor wrote: »
    In general- you can only get a residential mortgage on a property if the property is considered to be 'habitable'.
    If you can't even decide whether or not to repay the loan- I'd seriously question why you're even considering buying the derelict property.
    7% interest on a personal loan- in general- would not be a deal breaker for someone taking a punt such as you're outlining- providing the outlay is something you can afford to loose if it goes south, which it very well might do.

    The era of people getting a deal on a 'doer-upper', putting a bit of time and money into it, and flipping it- was 15 years ago. Up until recently it was clear that you would not get back any investment you might put into a derelict property through an increase in its price- there were a lot of people willing to buy completely unsuitable property purely to get out of the rental market.

    In the current context- I'd seriously question a proposal such as yours- unless there is something in the transaction that you haven't conveyed that seriously sweetens the pot from your perspective.

    +100 on this. Ireland is odd in that prices for a wreck vs a done up property don't vary much. I've seen fully gutted fire damaged houses making 85% of the habitable one in the same terrace.


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