The product is available to those in the building trade or demonstrable DIY enthusiasts. Loans will be available for periods ranging from two to 12 months and applicants must provide evidence of their ability to fund the necessary labour and materials to increase the property value to its true market value.
Rates vary from 1.5-2.5 per cent per month. But there will be no strict criteria on property type, condition or structure, provided the work can be carried out within the given budget and time scale. Introducer buy-to-let (BTL) mortgage/broker procuration fees are 0.6 per cent to 2.0 per cent of the advance.
Advances in excess of 100 per cent are available, provided a suitable residential or commercial property is available for security on a second charge basis to provide the funds to restore the property to its full potential.
Alan Hill, FMO’s group managing director said: “With an investment of time and capital, this type of property can be bought back to marketability and either sold on for profit or retained by the purchaser as an investment property, and mortgaged conventionally.”
Initially the product is only available for properties located in the North West, but the lender will consider opportunities in other parts of the country, and expects to lend in other areas during 2007.
Paul White, an IFA at Belgravia Insurance, commented: “The attraction of this is the follow up of a buy-to-let mortgage. I’d give this a cautious welcome until I find out the nuts and bolts of how this product works. It is very good for people going to auction if it can arrange a mortgage that quickly. However, what are the penalties involved if you go over budget on the development or run out of time?”
