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Hi,

I am after a bit of advice on how to actually execute this type of deal .

As we all know,you have to wait 6 months before you can refinance,or do a further advance(if you still can),but you can also have an agreement with the vendor where you do all your refurb work after exchange,then before you complete,drawdown the mortgage.I believe its still possible to get a valuation , 'in its finished state'.

The way i see it, this is surely fraut with potential problems.I know it's a bit of a generic question,but i'm after some pointers and what could go wrong,as currently a deal i'm looking at ,the property would actually need securing before any work could begin (both doors are hanging off!).

Thanks in advance

Hi Steve

I've done this many times with investors and the main downside is simple:

Once exchanged you must buy the property so if anything goes wrong with your mortgage aplication in the meantime you are in trouble. So yes its risky...to minimise risk I would do the following:

1, Get a lender to give you a mortgage offer with a full retention

2, Before exchanging speak directly to the valuer and ask what exactly needs doing in order to lift the retention

3, If you really want to be safe: pre arrange some sort of bridging in case 1 and 2 goes wrong

Cheers

John

hi john,

Thanks for the reply.

So if I secure the option on the property,the next step is the valuation,then the mortgage offer(with full retention).Then,fingers crossed,do the work,get the valuation required at completion,draw down the funds,get my cash back out.

There is enough room in this deal to make this work,but I would like to go over the different hurdles with a tooth comb to to be satisfied,as i am concerned that the if I pay out to do the refurb,something could happen and I could loose my cash.

.I am aware that I will have to draw up an agreement with the vendor to do this type of deal,but legal people will not necessarily advise on 'don't do this' and 'make sure you do that',hence me looking for advice on here,which I would appreciate.

Hi Steve,

You are right to go through this in detail as it can be very risky - see points above.

Most solicitors would probably make you sign something to say they have advised against this strategy but you are still happy to exchange to cover themselves.

If you need specific advice do call the office on 01424 205 373

cheers

John