How to Find Houses That Need Renovation

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

How to Find Properties

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.

Refurbishment Mortgage

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.

Expenses Involved

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.

Money

Conclusion

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.

2 replies
  1. Donna rennie
    Donna rennie says:

    Myself and my husband are looking to own our business renevating house, the only thing holding me back is the stabitily of paying our own house hold bills whist work is in progress, my hubby says he may be able to get an invester to invest the money an split the profit 50/50 which sound alike a win win for everyone but iam just a little scared of taking the pludge in case we loose every thing its a bit risk that could possibly, get us on our feet nstead of always struggling as we want to make a better life for us and our family my Huby is an eletricion and really handy with other DIY things as we have renavated our own house and iam am really creative and good at decorating plus we will get couple of trades in as an when we need them, am I being too cousious x

    Reply
  2. Lee Gillett
    Lee Gillett says:

    Hi Donna.

    There is always a bit of risk involved in buying a property to renovate and rent – but if you do your research correctly and buy the right house in the right location with a rental demand in the area and (as far as you can determine) no hidden problems with the house then the risk is usually worth taking in my opinion. And great that you can do most of the work yourself – that always saves money of course. If you get all of the above right then it would be almost impossible to lose money. I have mentioned renting above, but of course you could simply sell at a profit and then re-invest on your next renovation. Good luck!

    Reply

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *