Orient express advice – from Asia to living in a railway carriage
Q: Do you know of any specialist companies that are able to provide or assist in the provision of a mortgage for the purchase of property in Asia? A: In my experience, I have not found any specific mortgage lenders that will help with arranging mortgages in this region. Certainly, the mainstream lenders that I have spoken to would not look at properties in Asia under normal rules.
However, both Lloyds TSB and HSBC have strong connections with the Far East. As such, one of their subsidiaries or associates may be well placed to help. Q: My husband and I are currently in the process of selling and buying houses, with prices having been agreed throughout the chain, completion dates still to be agreed. We have just learnt that our buyer is having difficulty getting a mortgage for our house because the house has had movement in the last two years. Cracks in the walls have been revealed and have turned out to be old movement caused by external leaking drain pipes. The drains have been repaired by our insurance company and the subsequent period of monitoring has been completed satisfactorily, with the loss adjustors acquitting the house of further movement. Can you name any mortgage lenders who would not refuse mortgages on these grounds, with or without written confirmation from the loss adjustors? A: The general rule is that all mortgage lenders will lend, subject to their valuers’ comments. Ideally, you should obtain a full structural survey on the property, which will demonstrate the true condition of the building. The problem here, however, is that a subsequent buyer might feel that this report was biased in your favour, rather than properly independent. As such, I’d suggest that you perhaps offer to contribute to the buyer’s own survey instead. Another issue to consider is that any buyer will need to take out buildings insurance. Bearing in mind the recent history of the property, you will need to find out whether the property is insurable against structural problems, as this could otherwise discourage your buyer. Q: Our existing fixed-rate mortgage stops in September. We want to remortgage only over 10 years. Are there lenders who will allow us to do this? Our house roughly is worth £180,000 and we may want a mortgage of £160,000. I have a good salary of £75,000. My wife has some earnings from a part-time job. We are taking a little more than what we owe to consolidate some loans. A: Most lenders will happily lend to borrowers over a shorter term such as 10 years. However, if you are taking out an interest-only mortgage, they will look for some sort of vehicle to enable repayment of the capital when the loan expires.
The loan to valuation ratio that you are aiming for is under 90 per cent, and most lenders will accept this figure as an upper limit for what they refer to as debt consolidation. But, please be aware that many lenders will not offer their most competitive products over a shorter term, and that some smaller building societies may not accept debt consolidation at 90 per cent LTV. Q: I want to buy and renovate an old train carriage to live, and possibly work in. I don’t know of anyone who has done this, and if it would be possible to get any funding or mortgages from anyone, as I realise it does seem like a bit of a mad venture. Any financial advice would be much appreciated. A: The basic rule is that a property is deemed suitable to mortgage by the lender’s valuer, and not the lender. As such, you would need to persuade a valuer or surveyor that the train carriage forms adequate security for a bank or building society to lend money on.
Fundamentally, the valuer needs to be convinced that, if you were to default on your repayment obligations under the loan, the lender would be able to repossess, and sell the property or asset to realise sufficient funds to discharge the outstanding debt. Because the value of a railway carriage in itself will surely depreciate over time, rather like a car, I very much doubt that any lender will agree to it forming any part of their security for a loan.
However, if you are also intending buying the land on which the carriage is standing, some lenders will agree to the granting of a secured loan or mortgage on the plot alone.
Alternatively, or in combination with a secured loan on the land, you may be able to obtain an unsecured loan of up to £25,000 on the carriage.
Brian Newton runs Bluesky Financial Solutions, Leeds, tel: 0113 294 6222.