Financial frustrations

We’ve been on a bit of a hiatus with Ethel’s as my time has mostly been taken up dealing with mortgage companies.  We’ve hit a snag – our current residential lender has decided it won’t port the mortgage after all.

Truth be told, I’m not terribly surprised.  They’ve been closed for new business for years, have a dwindling number of mortgages on their book, but still have to maintain a staff to deal with us.  When I rang them up to go through the process, they kept having to put me on hold to find someone who could clarify points, because it was so rare that they ever had to do this.  To cut a very long story short, they put all the numbers into their computer, crunched it about a bit and announced that we couldn’t port the mortgage because their system said we couldn’t afford it.

Now, I know things changed in the mortgage market in 2014, but we were on a combined income of about £50,000 when we moved up here and they were completely happy for us to borrow £145,000 interest only, with a monthly payment of £737 because our deal of base rate + 1.1% worked out at about 5.5% at the time.  We’re now on a combined income of about £80,000 plus the estimated rental income (call it £20k after expenses) and they’ve told us that we definitely can’t afford the £115,000 outstanding – in fact, the most they’d be prepared to lend us if we ported the mortgage was….

….wait for it….

£32,500!!!!!!  (And no, I haven’t missed a digit off the front of that!)

It’s down to the credit cards, apparently.  They did say that they’d be happy to lend us the full amount if we would let them take 80% of the value of Ethel’s as security as well, but obviously that doesn’t have a title yet, so nothing they could secure against.

I’m now talking to the lender who’ll be doing the holiday let mortgage to see if their residential arm will take on our residential mortgage, as their commercial arm is happy with the credit card situation, but I fear that we may be stumped until Ethel’s is mortgageable.  I just hope someone doesn’t come along and snap up the other house in the meantime.

Sit rep

The bad news is that the mortgage company liked us but didn’t like the location of the house; they felt it was too remote to make a good holiday let!  I asked our broker to point out that was kind of the point and he sent them a link to this recent Conde Nast Traveler review of the North Coast 500, saying it “may be the best road trip in the world”, but they decided it wasn’t for them.  At this point, the broker said that if we really didn’t want to do it as a normal buy-to-let, he was out of options, so I spoke to a commercial holiday let specialist broker, who said that his fees on such a small mortgage would be uneconomic, but there was only one mortgage company he knew of which would do a loan of that size against a holiday let in Scotland and I should just ring them directly.

Several phone calls later, they’ve indicated they’re willing to lend subject to us putting in a full application and getting written confirmation from a holiday letting agency that our house will make £9,600 a year in rentals net of agency commission.  Several more phone calls and I’m waiting for the local area rep for one of the UK’s biggest companies (just under 20,000 holiday cottages on their books) to get in touch to arrange a no-obligation visit – I think it’s actually the perfect time for her to come and have a look, because I can ask her to assess Ethel’s house as well, and what she tells me will dictate, to some extent, how much money we invest in the furniture.

I’ve also found a very helpful holiday letting forum, Lay My Hat, which is proving to be a fantastic resource for finding out about where to buy good-quality bed linen and towels without breaking the bank, what to provide in kitchens and so on.

Meanwhile, down the road I’m still chipping away at the plastering and after a good 4.5 hour session today, the downstairs is pretty much done.  Mick will sand it down tomorrow (this is his punishment for accidentally putting a tapered edge piece of plasterboard on an external corner, leaving me with an absolute crater to plaster over!) and then it’s just a case of filling in any little holes with a Go Outdoors loyalty card (nice and flexible!).  I’ve started plastering the small bedroom upstairs, but we need to get a few more sheets of plasterboard so Mick can finish off the gable ends in the other two bedrooms before I can do them.  He’ll give Rembrand a ring next week and fingers crossed they’ll be coming west and can bring them out.

Promising news

Visitors who rent self-catering properties are thought to be worth almost £300m to the Scottish economy.

An interesting article on the BBC website.  The research only covers properties assessed for business rates as self-catering lets, not people doing Airbnb or renting out houses still assessed under council tax.

Some key numbers:

  • 23% of visitors to Scotland rented a self-catering property for at least part of their visit.
  • 32% came from England, with the north-west being the largest regional contributor and London the smallest.
  • Scots renting self-catering properties in Scotland accounted for 30% of the total, while the other 27 EU nations represented only 4%.
  • Most groups were made up only of adults, with children included in 30% of rentals.
  • The average spend on accommodation was reckoned to be £643 per group, totalling £313m.
  • They spent, on average, £245 on travel to and from the property.

That’s not the only promising news today – we have passed the initial affordability checks for the mortgage we need and have now proceeded to a full application for a decision in principle.  If we get that, then things are looking good – as long as they agree with the valuation.  We’ve got a little bit of wiggle room cash-wise, but not a huge amount.

I’ve also heard back regarding buying the land Ethel’s House sits on and the Agreement in Principle should be with me on Monday, but the gist is that I’ll need to pay them £150 for the actual land, plus £280+VAT to their solicitor for preparing and issuing the formal offer of sale, plus £300+VAT to the Drawing Office for them to send a surveyor up to prepare plans to be attached to the offer of sale.  Then I’ll have my solicitor costs on top of that, so it’ll work out about six times the cost of the land for all the paperwork!!  However, this gives the house title deeds and puts it on the Registers of Scotland, making it suitable security for a mortgage, so it’s well worth doing.

Traditional Easter

Easter weekend and DIY – as British a tradition as toast and Marmite 🙂  We have been no exception, although I had to bow out gracefully today because I’ve pulled a muscle in my back.  We’ve made progress though.

Mick has plasterboarded one of the dormers upstairs.  Originally this was just a flat ceiling, but I wanted it opened up and I’m glad we have, though it’s going to be a git to plaster.

Talking of which, I’ve nearly finished plastering the kitchen – just the sides of the chimney breast and the window to go.  Mick started to sand down the dried stuff, but his lovely new random orbital sander worked for about 15 minutes and then the motor burned out, so that’s going to be a phone call to the place he bought it tomorrow!

While I’ve been plastering, Mick has been plumbing and the shower mixer is now plumbed in and plasterboarded over.  We thought we could hear a drip, but when Mick took the right-hand sheet of plasterboard off, everything was bone dry and we couldn’t hear it any more, which is a bit strange.  We’ve left the plasterboard off for now and will investigate properly next weekend.

Spoils of my last shopping trip – black slate to tile the shower with, a mosaic tile for a border, teal paint for the double bedroom, grey for the living room, platinum for the bathroom (which will have one dark grey feature wall opposite the shower) and sage green for the single bedroom.

Pete’s done an amazing job with the fireplace.  The mortar has faded as it’s dried (the close-up was taken on Friday, the wider angle today) and all he has left to do is clean the stone up and then he can fit the stove.  I’ll be asking David to finish it off by doing a return back to the stone and then a simple wood frame around it, painted white.

I heard back from my friendly mortgage broker on Thursday.  He wants to approach two different lenders and asked me to fill out a chunky form with all our financial information and send it to him, together with Mick’s payslips, my tax returns and copies of our credit reports.  I’ve pulled it all together over the weekend and emailed it over today, so all I can do now is cross my fingers.

Under starter’s orders

My father used to say that buying a house was like the Grand National in terms of how many fences one had to jump to reach the finish line.  It appears that we only have three in our personal Grand National, but they’re all pretty much Becher’s Brook-sized.

Those of you going, ‘Eh?  What?  Buying a house??’ haven’t missed anything – this time last week we weren’t even considering buying a house, but then an opportunity came up that we knew we would absolutely kick ourselves for missing out on if we didn’t try and take it, and so after a telephone call with my mortgage broker this morning to clarify some points on both sides, we are going for it.

More details of the house once it’s sewn up, but our three fences are:

  1. Can we raise £127,000 on a buy-to-let mortgage?
  2. Can we get a market rental valuation of £650 a month?
  3. Can we borrow back the mortgage reserve on our current mortgage?

I spoke to our lenders this morning as well, and the answer to 3 seems to be a cautious yes.  They’re closed to new business, so need to double-check with the higher-ups that it can be released and also the full amount will need to be within the original lending criteria in terms of LTV, although we should be okay on the latter point – we’re currently under 60% LTV.

So watch this space and please cross your fingers!

Going back to my father – he would have been 84 yesterday, so he was on my mind, and with the Grand National being run last Saturday, I was thinking about a letter he wrote me when I was at university and he and Mum had put in an offer on a beautiful Grade II-listed house in Somerset, with the plan of my grandmother going to live with them there as well.  It only took me a few minutes to find it, despite the current state of my office (it still has an entire Howdens kitchen crammed into it!), and I realised from the date that it was the last letter he ever wrote to me before he died – he was in a serious car accident seven days later.  So in a post about my Grand National fences, here are Dad’s, from 23 years ago, together with the fountain pen he used to write them which I still use every day.

Not much to report

Progress has been slow over the last fortnight.  David hasn’t been able to get to us for the past couple of weeks, but hopefully will manage a couple of days next week, as Dougie now has a reel of shotgun cable, ordered for him by Colin Chessor (who’ll be doing the satellite dish installation in due course) and is going to be running it into the living room and bedrooms next week.

Mick has spent a day down there today and we now have an insulated living room and the living room ceiling is plasterboarded.  By the time I went down to feed the sheep (who moved back to the fields around the house yesterday) it was too dark for photos.

On the finance and admin side, I got round to catching up on entering all my invoices and spends into my spreadsheet – we are now £35,000 into the budget *gulp*.  What I’m pleased about is that the majority of that money, all bar a couple of thousand, has been spent with local companies and tradespeople.  I do try to spend within the local economy where I can.  I’ve also ordered the correct Ordnance Survey map extract needed for the decrofting application, which arrived on Friday and is sitting in a tube on my desk ready for me to break out the colour pencils.  Since it cost me £19, I think the first thing to do is ask Mick to make several copies of it for me to practice on!  (My scanner doesn’t do A3).  Given I was sorting sheep out on the area in front of the house yesterday (we managed to pick up a few extras coming down the village!), I’m only going to apply to decroft the bit of ground the house sits on and a tiny bit behind it for a small garden – as long as I draw the map accurately, it should go through with no problems, as I’m not applying to decroft any areas that would restrict access to the rest of the croft.

Every little helps

I really need to sit down and go through the enormous stack of invoices that’s piling up under my desk, because I suspect I’ve gone very off-budget.  However, I’ve managed to bag another bargain this evening – B&Q had an offer on Sandtex masonry paint, 2 for £40 on all the 5 litre cans (usually £29 each), meaning I can have the colour I want for a little less than the colours that come in the bigger 10l tins (£44 each was the cheapest I could find them).

The paint splurge was prompted by Magnus sending me an email with an estimate of £800 for his labour costs, which he reckons will be 5-6 days and includes completely power-washing the house, but I need to buy the paint and he reckoned 100 litres would be a good starting point.  20 cans in the basket, £400 down from £580, free delivery to the Highlands and, as long as it tracks properly, 3% cashback via Quidco*

Where did the weekend go?

It seems it was Friday only about two seconds ago!  This is where the roofing team got to on Friday afternoon:

156 armadale - roof - 5

You can’t see it very well on the picture (click on it to enlarge), but there are four scalloped diamonds on the roof, spaced in between the windows.  Pete suggested that we do a line of scallops connecting them as well, to echo the one at the ridge line.  I was expecting the diamonds to be three slates wide, as per my original drawing – if you want a laugh…:

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they’ve actually gone for four and we may have overcooked it slightly, but I think it only looks a bit overdone at the moment because the rest of the outside isn’t finished.  Once the house is painted a warm white with a dark green front door, a couple of dark green planters with colourful flowers either side, a new fence and new gate, it might well be just right.

Of course, the fact that the front is nearly finished means that I’m going to have to write another big cheque soon, as the second of the three payments is due on completion of slating.  My credit card bill for the insulation and flooring arrived last week (1% cashback on that card!) and when I logged in to pay it, I was slightly alarmed to see that I had no money transfer or balance transfer offers available – there’s been one on that card every month for at least the last three years.  I still have one available on my other card from the same provider, which I will take up next week, but this card has a £12,000 limit and not being able to access that is going to leave quite a big hole in the budget.

Save

Save

Hey big spender

I had to write the first big cheque last week (well, the first one since the one I wrote for buying the place, which was a whopper!), so I thought it was probably time to put my cards on the table and share my budget.

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There are really two parts to the budget: what’s needed to get it to the point where it could be sold or rented and what’s needed to furnish it to turn it into a holiday let.  Here are our figures.

Item Estimate
Roof & stonework £16,000.00
Electrics £4,655.00
Heating & burner install £7,000.00
Joinery £5,000.00
Kitchen units £3,000.00
Downstairs flooring £1,600.00
Carpets £750.00
Plasterboard & insulation £2,000.00
Skirting boards £200.00
Kitchen appliances £2,000.00
Switches, sockets, light fittings £500.00
Interior paint £500.00
Exterior paint £1,000.00
Shower tray & screen £700.00
Shower £400.00
Woodburner & kit £1,500.00
Windows and door £5,000.00
Door stripping £400.00
Miscellaneous tools £2,500.00
Bathroom tiles £250.00
Garden/fencing £2,000.00
Interest, council tax, electricity £3,500.00

Total: £60,455 *gulp* And we’re actually already £2,720 over the roof budget because of the extra work to the stone. On the plus side, the house and surrounding fields were valued at £77,500 on the home report (the rest of the value being assigned to the other croft) and should be worth in the region of £150-160,000 once we’re done, so we’re still just about in profit.

On the furnishings side..

Beds x 4 £750.00
Mattresses x 4 £1,300.00
Sofas x 2 £1,100.00
Kitchen table & chairs £800.00
Coffee table £200.00
TV unit £200.00
TV £300.00
Wardrobes x 3 £750.00
Drawers x 2 £500.00
Bedside tables x 4 £500.00
Pots, pans & crockery etc £600.00
Cushions, pictures etc. £500.00

Total:  £7,500.  I’ve priced up for mostly new, but am hoping I can save some money by buying good-quality second hand – browsing the local Facebook for sale group, I’ve already seen a really nice oak single bed frame that would be perfect for the small bedroom for £45.  A friend of mine recently furnished an entire rental property from the weekly furniture auctions at Dingwall and has a teenage niece who’s got the long summer holidays coming up who is very, very talented at smartening up bargain buys, so I’m hoping she might be employable for a few days!  The one thing I refuse to buy second-hand are mattresses.

We’ve also agreed a £5,000 contingency, bringing the overall grand total potential spend to an absolutely eye-watering £72,955.  We have enough cash, from savings and 0% offers, to get us to the house being more or less finished, but not the garden – so I need to crack on with the decrofting application for the house site to make sure that as soon as there’s a working kitchen and bathroom in place, I can get on with a mortgage application to release money to pay back the 0% deals as they expire and put the final touches to it so it can start earning its keep.

Stripped

Mick decided to take the day off on Friday, got the bit between his teeth and completely stripped the living room.

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Sadly no enormous fireplace on this end.  We did have a brief discussion about the merits of swapping the kitchen and living room over, but decided that the extra hassle and expense of replumbing probably wasn’t going to be worth it.  It just means we rotate the kitchen layout 90 degrees and drop the idea of having a big dresser against a wall for all the crockery and cutlery.  There is, however, a lovely old hearthstone in that fireplace 🙂

As the plasterboard came off, it was clear that there was a membrane underneath the concrete floor, which is why it’s dry.  Unfortunately it doesn’t go under the walls, so a little damp has got into the old lime plaster.  We’re going to pick it all off, let it dry out and take a look at the stone, then see if it needs tanking before we put the studwork back up for the insulation and new plasterboard.

Dougie the electrician rang on Saturday with his quote.  Bear in mind that this was the list we ended up with when he asked us what electrical things we wanted in each room:

Front room

Main BT socket
Satellite connection
3 x wall lights
2 x standard double sockets
2 x double sockets with USB chargers
CO2 alarm

Hall
Smoke alarm
1 x single socket
1 x ceiling pendant light

Bathroom
Electric shower to be changed out
Electric towel rail
3 x large (about dinner plate size?) recessed ceiling lights
Extractor fan

Kitchen
6 x recessed ceiling lights (standard spotlight size)
Cooker
Heating control system
Hob hood extractor
Small spots for lighting the food preparation surfaces
3 x standard double sockets
2 x double socket with USB chargers

Landing
2 x recessed ceiling lights
1 x single socket
Smoke alarm
Move meter from hall and bring in power here instead of through the front door
Low-level, fairly dim lights up the stairs, wired to a switch in each of the three bedrooms to light people up and down to the bathroom at night, without waking everyone up by switching on the main landing light

The two larger bedrooms
1 x central pendant light
3 x double sockets with USB chargers
Satellite dish connection
Ethernet connection
Smoke alarm

Smaller bedroom
1 x central pendant light
2 x double sockets with USB chargers
Satellite dish connection
Ethernet connection
Smoke alarm

What do you reckon his quote was?  Mick was thinking in the region of £6,500-£7,000.  I was hoping it would be about £5,000.  He’s quoted us £4,655.  I was so surprised that I completely forgot to ask what I needed to buy and what was covered in that list!  When he was talking about the stair lights, he said the ones he intended to use were in pack of six, so lights must be included, but I know that I’ll need to pay for the shower, the extractors, the towel rail and, obviously, the cooker.  What I’m not sure about are the cover plates for the light switches and sockets, so I’ll have to email him and check.

Since he says he’ll want to start upstairs and can begin in about three weeks’ time, we attacked the upstairs again this morning and made good progress in stripping out some of the last bits of panelling – now David the Joiner has confirmed that all the internal wood that isn’t a sarking board or rafter is non-structural and can be removed, we’re being a bit more adventurous with the pry bars!  Only one worrying moment, which was when I was breaking out some of the panelling below the window in bedroom one, put my bar against an enormous rock in the wall to brace it and the rock moved….!!  It’s completely loose, so it’s been pushed back into place and we’ll get Pete to have a look when he’s next here.  A little bit of wet stone under the window in bedroom two as well, but we’ve had an easterly with rain in it all weekend, and I think it’s just been forced in around the window.

I also got to grips with a power tool for the first time – I used Mick’s drill with a Phillips screwdriver head attached to remove the handrail up the stairs.  It took a couple of goes to get the idea that I had to keep it pushed into the screw even though I was using it to take the screws out, as that seemed a bit counter-intuitive, but 24 screws later I was quite comfortable with it.