1:My client has a main residential property worth £695,000 with a mortgage of £470,000. He owns the property next door (a semi) worth £500,000 with a mortgage of £400,000. He needs to raise £100,000 to complete conversion into one property, ideally by removing one or both of the existing mortgages. Completed property will be used as main residence and estimated final value is £1.3 to £1.5m. Earnings of £280,000 per annum. Will any lenders consider this proposition?
Tuesday 30th June 2009

The fact is that there is no real equity in either of the properties (67% and 80%). A further £100,000 on the 1^st property would take the LTV up to 82% and I just can’t see anyone doing a 2^nd charge on that basis – and that is before allowing for costs and fees. Even if you could find a short term lender to take out the existing lenders, they would be replacing a lot of relatively cheap money with relatively expensive borrowing just to raise £100,000. Lastly, if the final value came in at £1.3m, you would have to find a long term lender willing to lend in excess of 75% LTV.