6 Tips for Buying a Fixer-Upper House
Lockdown created a boom in home improvements with social media platforms such as TikTok and Instagram emphasising to a new generation the joy of transforming your living space. Buying a house in need of work can be a good strategy, giving you the opportunity to really put your stamp on a property. But doing up a place in need of extensive refurbishment is a challenge for anyone. If it’s something you’re considering, bear these tips in mind.
1. Opt for the full survey
While you might be watching the pennies, the survey is not an area to cut costs. The cheaper homebuyers’ report won’t necessarily pick up the type of structural problems often found in this type of project.
It’s best to spend the extra cash and have a full Building Survey carried out – especially if you are buying an older property which can often have structural or dampness problems. These can turn out to be major issues which you may end up spending thousands of pounds on to rectify (whereas a survey starts at around £600). A Building Survey will also look into invasive weeds, the house’s electrical system and may highlight other problems you may never even have considered.
2. Use it as a bargaining tool
Your survey is also a good place to start when looking at the repairs needed to bring your property up to scratch. Use it to help you work out what is needed and pull together a budget. Once you know how much the repairs will cost, you may be able to negotiate with the seller over the price.
You will be able to find out the cost of repairs by researching trades people in the area. Get three quotes for the cost of the work and deduce an average cost. That way you can show your calculations to the seller when asking for a reduction in the cost of the property.
3. Really do your sums
If the work is major then again, carefully research average prices for what you’re likely to be doing – whether an extension, kitchen refurb or new roof. If you have a particular builder in mind, then take him or her along to view a property you’re serious about.
With a good understanding of the refurbishment costs, you can then compare the asking price to local properties which have recently sold. That way you can reassure yourself that you won’t be paying too much for the property in its unfinished state.
4. Brush up on your DIY skills
These days you will find tutorials on just about anything on YouTube and property renovation is no exception. Either that or you can take a day or night course in subjects, such as tiling, painting and gardening. Carrying out these tasks yourself can save a fortune in costs, the money for which you can put towards something you can’t do, such as electrical or plumbing work.
5. Understand your funding options
Getting a mortgage for a property that needs substantial work may not be as straightforward as with standard homes. It may be worth speaking to a mortgage broker for help finding a lender who specialises in renovation properties.
This type of loan is known as a fixer-upper mortgage. Some lenders will consider the eventual price of the property once the renovations have been carried out, as the basis for the amount of loan they are willing to provide. It may be as high as 80 per cent of the completed value of the property, for instance.
A renovation mortgage – also known as limited cash-out refinance mortgage or a transaction mortgage – gives you money to do the repairs and remodelling and pay this off in monthly instalments at the same time as the mortgage itself. This gives you the advantage of getting the money for the renovation at the same low interest rates as the mortgage itself.
Before you look at mortgage options it’s always a good idea to get professional advice about other funding options – bridging loans or re-mortgaging your existing property, if you plan on staying their while you do up the new place.
6. Have a budget plan B
Nearly half of all building projects go over budget so you need to be realistic about spend and know what you will prioritise if costs spiral. Structural improvements are essentials but think about whether you could live with that galley kitchen or dated bathroom until you have the funds to carry out phase 2. If the answer is yes (and why not, knowing that it’s going to be temporary) then it could be that you can use the equity from your property to fund the new kitchen or bathroom a few years down the line.
If you are looking for a fixer-upper in Newington Green, Islington, Highbury or Stoke Newington, give our friendly sales team a call. They can match you with prospective properties and arrange viewings. Get in touch today.