How to Get a Mortgage for a Fixer-Upper

There are a few things you should keep in mind when you consider purchasing a fixer-upper.

Get Professional Opinions

It's a good idea to speak to an expert and get them to look at the property before you make an offer. This will help avoid making a mistake that could end up costing you a lot of money.

You should also consider the market value of the property. It's important to make sure you're not paying too much, especially if it does need some work. A professional appraisal can help you determine the fair market value of the home.

Be Realistic

It's critical to get a clear idea of what needs to be done and how much it will cost. Being realistic will help you set a budget and avoid overspending on the property.

Get a realistic idea of the cost by asking several contractors to provide quotes for the work needing to be done. Consider timelines as well — it's important to factor in contingencies and unforeseen delays.

Timeframe

You should also think about how long you're willing to spend on the project. Fixer-uppers can take a long time to complete and there's always the possibility that something will delay the process.

When setting a timeline for the project, be realistic about how long it will take. Don't rush the process, as this can lead to unnecessary mistakes. Experiencing delays due to an unrealistic timeframe adds stress and could lead to additional issues.

If you're not sure how long the project will take, ask a professional for their opinion. They'll be able to give you a realistic timeline to complete the work.

Consider the Costs of Financing

Fixer-uppers can be expensive, so you'll need to make sure you can afford the monthly payments. You should use a broker to compare mortgage rates, terms and lenders to find the best deal.

Don't Forget About Planning Permission

If you're planning on doing major renovations, you'll need planning permission from your local authority. This can add to the cost and timeline of your project, so make sure to factor it in.

Examine how easy it will be to get planning permission for the home. If you want to make significant modifications or are considering purchasing a listed property, you'll need permission from your local government. It might take up to 12 weeks for the council to rule on your application after it's submitted to allow neighbours to have a say.

A lot of small renovation projects don't need planning permission, so bear that in mind if you want to get started right away.

Consider Your Project Management Options

Decide how you're going to manage the project: you can do it yourself, hire a general contractor, or use a project management company.

Each option has its advantages and disadvantages. Doing it yourself gives you complete control over the project but will also require more time, effort and knowledge. Hiring a general contractor will be more expensive, but will save you time and hassle. Unless you're using a project manager, you'll need to oversee the contractors and work being carried out.

Using a project management company is another option if you don't want to oversee all the details yourself. A project manager will deal directly with contractors, saving you time and energy. This option can also help you stay on budget and schedule.

When you make this decision, you should consider your own set of skills. If you're not experienced with in-home repairs or construction, it might be best to leave the project to someone who is. This will help you avoid making mistakes that could end up costing more in the long run.

Prepare for the Unexpected

Even if you've done your research and know exactly what needs to be done, there's always a chance that something will come up that you didn't anticipate.

For example, you may find that the property needs more work than you originally thought. It's important to have a contingency fund set aside in case something like this happens. It's usually recommended to set aside 20% of the purchase price for unexpected costs.

Older Houses and Hidden Problems

Older properties often have hidden problems, such as asbestos, mould and outdated wiring. If you suspect there might be a problem, get it checked out by a professional ahead of time.

If you use the wrong renovation techniques when working on an older property, you could cause extensive damage. It's important to do your research and consult with experts before starting any work. Subsidence issues can also make it harder to get buildings insurance on older properties.

Old buildings often have outdated and potentially dangerous wiring, so you may have to rewire the entire property. This can be a costly process — make sure you factor it into your budget.