Hello Can anyone help me with a renovation finance question? I will hopefully be renovating my Mothers house soon, it is a large detached 5 double bedroom house in need of general modernisation. The task itself (though not ideal for a beginner!) is not the problem it is raising the finance that I am not sure about. The house is currently worth £280-300k with only 10k outstanding on the mortgage so there is no shortage of equity! The target resale price is £400k for which I expect to have to spend in the region of £40-50k. I will be working full time on the project so will not be able to finance repayments and my Mother only earns about £800 per month, is there any way to finance this? are there equity release products for renovation? Any comments will be very much appreciated. Ben

Ben Say you need 40k over 6 months to do your renovation and you can borrow at 5% then take 40k + (5%x6/12) = 41k and make your interest payments from your spare 1k. You could use a mortgage, bank loan or credit cards. Make sure you have got your budget right + be realistic on timescales + realistic on eventual selling prie. Dont forget to include fees.

Also consider that there are several credit cards in the market offering 0% on purchases for 6 or more month. This is a cheap way to finance, BUT, be realistic on your budget or profit predictions... as thereafter rates growth to around 15/19%!

Thanks very much for your comments, I am going to contact a broker in the first instance to see what they can offer, does anyone know a good one? Althought the credit card is potentially a cheap idea we would not get the kind of money we need due to my Mothers low salary and my self employed status (should prob have mentioned that!), we really need to take advantage of the equity that is in the property. I have mentioned people talking about investor funding, can anyone explain this option to me? Thanks Ben

When looking at cost of credit cards dont forget to consider the impact of their fee. Many cards charge 2%-3% for a cash advance or balance transfer. 2%pa for 6 months = approx 4% to be added to whatever the advertised interest rate is.

I am not actually considering credit cards just so everyone is clear. Credit cards seem to be a very desperate and dangerous way to finance property development, as Nick suggests the fees and interest rates are way over the odds. Ben

Hi Ben I have a contact who provides renovation finance, at good rates with interest rollup (ie interest is added to the borrowed amount) so you don't have to find the money each month for the loan. As you would expect they would need to do a valuation & they charge a fee for the loan. I have used this type of finance with no problems. I'm not allowed to give contact details out on this forum. I would suggest you contact property secrets and ask them if they will pass your email details onto me. Goodluck Antony.

Ben, I use Matt Harris of Simplicity Finance in Sheffild (even though I am in Kent) who is extremely helpful. Hope this helps. Terry George

Ben, firstly open accounts with your local Building Materials Suppliers based on your 'Self Build' project eg Jewsons, Bradfords, Grahams etc etc, they should give you credit for at least 30 days and you can stretch this to 60 days quite easily. Also might be worth talking to your bank first, it is a small percentage of the value that you require and they may well arrange 'development' or 'self build' finance which you draw in stages as and when you need it rather than a lump sum up front which you will be paying for and not using. Take a schedule of costs and your plans with you so they know you understand what you are doing.

One more thing Ben, you have (or your mother has) a small mortgage left on the house, why not talk to this mortgage supplier, if the payment record on this mortgage is good they may be overjoyed to help you even though you don't have the income as they already have the house as security for what is a very small loan.