Friday 16 April 2021 12:54 pm

What to consider if you’re looking to buy your dream ‘fixer-upper’

MD and mortgage expert, Online Mortgage Advisor

Over lockdown, social media platforms such as TikTok have played a huge role in a younger generation looking to buy their first home as a ‘fixer-upper’ project. With neutral aesthetics and dramatic transformations, putting your own stamp on a home has never been more appealing.

Pete Mugleston, MD and mortgage expert at Online Mortgage Advisor has some top tips on what to consider when you’re looking for a ‘fixer upper’.

Consider having a full building survey carried out

While a simple homebuyers report is the cheaper option, it might not pick up on structural problems or fundamental issues associated with many fixer-upper projects. This can be a great starting point if you’re buying a property that needs heavy renovation as it can provide you with a comprehensive list of the repairs that need carrying out and will give you the chance to put together an inventory of the materials and resources you’ll need. The results of a full building survey could also give you some extra leverage to negotiate a better price with the seller.

Research your funding options

Once you’ve calculated the cost of the repairs, look into the funding options that are available, assuming you don’t already have the capital to buy the fixer-upper property outright. If you already own a property, could a re-mortgage potentially free up enough capital to bankroll the repairs? If the property you’re buying is a shell of a building and you have the means and expertise to carry out the works yourself, a self-build mortgage might be an option. If the property is too dilapidated to secure a mortgage against, there are bridging loans for people who need to make a purchase quickly, and maybe even a simple loan could help you out if you only need to borrow a small amount for essential repair work.

Make sure the price you’re paying reflects the work needed

It’s obviously important to make sure you’re paying a fair price for a fixer-upper property that needs work, so compare the asking price to similar properties that don’t need any renovations. This is why it’s vital to be thorough when calculating the costs of the repairs. If you have an accurate figure to hand, you can add this to the asking price and make sure it’s in line with similar properties that have been finished to a high standard.

Have a back-up plan for if you go over budget

Almost half of home renovators go over budget, so having a plan B drawn up is so important. Make sure you’ll, at the very least, have enough funds to make the property habitable and ask yourself whether you could compromise on the rest, if it comes to that. Could lower-priority renovations, like bringing that aged but perfectly functional kitchen up to date, be put off until further down the line? There could be more borrowing options available to you by this point, assuming your property increases in value and you’re happy living in a home that still needs ongoing work.

Consider using a mortgage broker

If you need to borrow funds to buy a fixer-upper property, bear in mind that there are mortgage brokers who specialise in renovation properties. They can go over all of your funding options with you, from bridging loans to self-building mortgages, and help you choose the right one. Most brokers will be happy to give you a free initial consultation about your plans with no obligation to proceed, so this is really a no-brainer if you don’t have the capital to buy outright.