The Hideous Hurdles of Renovation Mortgages
Updated: Dec 4, 2017
Ok, so this is without doubt going to make for really boring reading to the average Joe, but securing the finance on our derelict home was a seriously stressful, protracted, 7 month long migraine. And honestly? We LOVE our home, but I'm just not sure we’d do it all again if we knew how hideous that period of time was going to be.
Don’t forget we were squatting with family for eight months in all, two adults, two lads, a toddler and huge puppy, after moving in to said family’s home ‘just for a few weeks, while we finalise the mortgage!’ If there’s one untruth I’m going to burn in hell for, it’s probably going to be that one. (Inadvertent untruth.)
Despite the hospitality of family, it was bloody awful. I cannot overstate how fraught the process of securing our renovation mortgage was. Thankfully, we had an exceptional Mortgage Adviser shepherding us through.
So anyway, to squeeze a bit of good from our experiences we figured we’d share them, seeing as we can’t be the only ones out there daft enough to put themselves through the same aggravation. Knowing what hurdles we cracked our shins on might just help another family out there to see 'em coming, and know when to jump.
So here it is. The path to securing our renovation mortgage in one brief(ish), low-rantorama timeline for ya. All the duff hoops we had to jump through, date by date.
Fill your boots.
(Just to be clear - because someone's going to read all this and scoff 'why didn't you just pick up the phone and get some answers?!' - we only ever dealt with our Mortgage Adviser. Our Mortgage Adviser only ever dealt with the self-build/renovation mortgage Broker, and only the Broker liaised with the Lender. I know.
And here beginneth the tale...
Jan - We put in offer on a (previous) cottage, contact a mortgage advisor and secure a mortgage DIP (decision in principal) from high street bank. Easy. This property falls through, booo... but then we find THIS smasher of a house, yay! Put an offer in, and start cruising Pinterest for curtain ideas. If only we'd have known what was coming...
Feb 16th - Offer accepted. Whoo hoo! We provide Estate Agents with previous mortgage offer (Decision In Principal) from high street lender, Halifax.
March 4th - Halifax survey the new property
March 8th - Halifax won’t lend on this property due to level of disrepair. Gutted, but looking back, couldn't blame them. We start looking into bridging loans as an option to tide us over until we can get enough work done on the house to satisfy another high street mortgage lender. We quickly decide they are far too risky to commit to as self-employed people.
22nd March - Mortgage Adviser starts ball rolling with Brokers of self-build and renovation mortgages
30th March - Mortgage Adviser and self-build Broker put mortgage application to renovation Lender
12th April - We receive Key Facts illustration outlining mortgage, should it be offered. 5.4% (ouch)
18th April - We go in to Mortgage Adviser's to handover all requested documentation and sign application form.
20th April - We provide Lender with more supporting docs - passport IDs, bank statements, utility bills, plans and elevations & sales particulars of the property, Construction Industry Scheme statements for Jim
25th April - Mortgage Adviser asks us for all of Jim’s Self Assessments – we send off digital copies of completed Tax Returns (SA100s)
9th May - After some going back and forth, we learn that the documents still outstanding are Jim’s last two years’ SA302s* (which just show the calculations the Inland Rev make off the SA100 forms) and corresponding Tax Overviews (*The SA302 is a brief summary of the income that has been reported to HMRC. It is effectively a certificate that documents exactly how much income you have declared. Therefore form SA302 is an easy way for a lender to verify that the income on a mortgage application is the same as you have shown to HMRC)
11th May - Build loan company have sent us an email advising they will need an architect to be in place: “As this is a self-build mortgage we would require an architect to be in place to sign off the stage works for the applicants therefore would require you to provide us with the details and PI Cover for the architect."
11th May - Contact Jim’s accountant to ask him to request SA302s for Jim’s previous 2 years accounts (Mine were already with Mortgage Adviser from previous property mortgage enquiry
19th May - We provide Jim’s outstanding ‘Tax Overviews’ which can be printed directly off HMRC online but still waiting for HMRC to send through his SA302s, for which they advise there is a 2 week lead time.
20th May - Mortgage Adviser advises Architect’s contact info has been accepted and Broker has taken that item off their chaser list.
25th May – Clocked out of last tax year so Broker requests 15/16 tax return info too!
1st Jun – I wonder why we haven't heard from Jim's accountant and realise all the financial info I’d emailed off to him for Jim's 15/16 tax return is still sitting in my drafts folder. Groan.
2nd June – Underwriters advise Mortgage Adviser that as we’d clocked into another calendar month, we’d now need to provide a new set of bank statements (original certified copies)
8th June – After nearly a month , still no SA302s through the post. Our accountant phones HMRC to request them by fax but HMRC won’t do this anymore.
21st June – After SIX WEEKS CHASING – SA302s arrive in post.
18th June – this back from cost assessor - Costs are very low from what I can understand with the information provided. Have the clients got a structural report I can see. ... Can I see evidence the client is a builder & any letters from contacts helping at reduced or for free.
19th June – We provide Broker with copy of original valuation survey provided by Halifax. We also provide letters from our plumber brother-in-law and electrician buddies saying they’d do the work for X amount of dosh. We also pointed out that as far as ‘evidence’ of Jim’s building pedigree went, every bit of financial documentation we’d already provided to support our mortgage application - right down to his Construction Industry Scheme membership!!! - pointed to his profession as a builder.
28th June – Total shocker! Our application makes it through ‘1st checks’!
<< Now at this point, you'd be forgiven for thinking we'd hit a nice bit of even ground.>>
Because our application has taken soooo excruciatingly long by this point, my passport had bloodywell expired! Of course it had. So I needed to provide new ID. Also, for the same reason, we were then asked to provide more of the dreaded SA302s. One for each of us for the latest financial year. I think I actually pulled my hair out that day. And there was another glitch… the architect we’d appointed to satisfy the criteria of the mortgage (local chap rather than big corporation type) didn’t have high enough PL cover. Insurance was also an issue our end too. We had to take out policy with £5m public liability and £10m employer's liability to cover anyone working on our property, even though Jim's going to be doing 95% himself. Those kinds of figures are fine for a self-build super-home, but a renovation like this? Seemed extreme. And didn’t come cheap at around £1k for 12 months.
30th June – we very politely ask Mr Architect if he can up his cover on our behalf. He very graciously agrees. His insurance broker however lives in France. More delays.
6th July – application signed off by the 2nd checks team, they will need the payment for the application and valuation fee (Application is £199.00 and valuation fee is £290.00 ) We waited with bated breath to hear news back from new valuation report.
14th July – Broker chases us up regarding our architect upping his public liability insurance to a bazillion squid before we can nominate him to sign off work for us should we wish to draw down any further funds from the stage-release mortgage.
17th July – we’re asked to provide proof of architect’s qualifications.
18th July – We receive letter dated 15th July from the mortgage lender telling us there’s missing evidence of income (at this stage!) and if it’s not provided within 5 days of the date of the letter, our application will be cancelled! Our 6-month long application! Cancelled! That particular day was probably the closest we came to having an actual heart attacks.
22nd July - 'I have had a letter from **** Building society regarding your income and the fact your SA302 does not agree with tax overviews.' Thank the Gods also that our accountant is as ace as our Mortgage Adviser and confirmed to the the Lender that they did actually marry up.
27th July – Our very obliging architect ups his public liability insurance
28th July - Lender rejects all bank statements because when printed from online banking, our names and address don't appear in the same spot on every page of the statements! Broker says, 'I am really sorry that we are going round in circles with this. I have spoken to Lender again and as the name is not directly above the address they are stating anyone could open the bank statement, I have argued that the both the clients' names are clearly printed on the statements however to due to the reason stated they will not accept.' So I then have to go in to bank, get them to print off three months' statements for each of us (can you imagine the paper?) but they print the same bloody way! Not to go home empty-handed, I then watch the cashier stamp, date & sign every page.
29th July – Finally get valuation date of 1st August
3rd August – Valuation report is in! And it says basically what we did – the place is knackered, but is going to be fabulous when finished!
4th August - Broker says we need more proof of residence. Tricky when you live with family and aren't named on the bills. We ask solicitors to confirm to Broker/Lender they'd been corresponding with us at that particular address.
15th August – After 2 weeks chasing, Broker & Lender both say they haven't received any confirmation of residence from solicitor and that mortgage offer won’t be made without letter of confirmation. Solicitors confirm letters were sent and acknowledged. Argh.
Aug 18th 2016 - Finally receive renovation mortgage offer from Lender!
And then we spent the next 2 months in conveyancing hell*.
Now then, who fancies applying for a renovation mortgage?
*The house had been in the same family for generations. And therefor never registered with the Land Registry. Also, the property had been subdivided into two flats and the whole lot had to be registered under 1 title... along with the footprints of two original cottages in the back garden. Plus there were hardly any deeds to play with. But hey, emotionally frayed and with nerves/finances in tatters, we finally got those keys.