mortgage - plus separate loan needed also.

free4440273

i will try to keep this simple. i am wishing to buy a house worth £250k. i have a deposit of 50k - so i will want a mortgage of 200k. but the house needs £50k spent on it to make it livable. presumably, i will have to obtain this 50k as a separate (non-mortgage) bank loan? i ask this because i will need the 50k in its entirety in order to do up the house. when you receive a mortgage you don't actually receive the full funds in one lump sum - this explains why i would need the 50k as a separate bank loan. am i right in assuming this? could someone clarify. thanks all

homer_j_3

House Value = 250k, Deposit of 20% so you would be looking at an 80% LTV.

What is the income that you would be declaring for the mortgage?

Based on purely the information above, I think that you may be better trying to go for a 100% mortgage if your income supports it and using your savings for the work. If your income does not support it then I would question the affordability of what you are trying to do.

I would hope that the work you will do will increase the value of the property and if you can find yourself a nice 1 year deal and then remortgage once the work has done, you can look to put your loan to value down and get a better rate of interest.

Just a thought that is all. It would be worth speaking to a professional to ensure that you do get the right advice though following full disclosure of all your details.

free4440273

thanks for that. if i choose not to go for a 100 per cent mortgage, but instead stick to what i had in mind, would i have to take out a separate bank loan for the 50k i need to do up the house. this would be an additional cost, and i would have to pay interest on it. is there an alternative way of getting that 50k? thanks

herbiesjp

As long as your income can support the loan amount I think what homer was saying would be the easiest and cheapest route for

homer_j_3

personal loans that are unsecured in the normal sense are limited to 25000 under the consumer credict act. If you want to go above this you need to secure the debt against the property.

If you have to secure the debt then you may as well do what I said above. If you are looking to do a specific bank loan, by all means ask your bank manager but I guess that it may not be possible without securing against your property. Which goes back to what I said.

Going back to unsecured loans, these also are typically only given over a shorter term so if you are lucky to get one for 10 years, the cost of the loan will be very expensive and could stretch you if you are pushing your income multiples in the first place.

You really need to see a professional to allow them to gain all the facts for anybody to tell you exactly the best route.

Debt_Free_Chick

free4440273 wrote:

i will try to keep this simple. i am wishing to buy a house worth £250k. i have a deposit of 50k - so i will want a mortgage of 200k. but the house needs £50k spent on it to make it livable. presumably, i will have to obtain this 50k as a separate (non-mortgage) bank loan? i ask this because i will need the 50k in its entirety in order to do up the house. when you receive a mortgage you don't actually receive the full funds in one lump sum - this explains why i would need the 50k as a separate bank loan. am i right in assuming this? could someone clarify. thanks all

But you don't need £50k, in one go ... .do you? Could you not afford to fund the work monthly, as you go along?

Alternatively, if your income is sufficient, a 95% mortgage would mean a deposit of £12,500 leaving you with £37,500 to do the work ... and a certain period of time to save the remaining £12,500. Would that work?

free4440273

thank you debt_free_chick: you provided an extremely useful, rational and 'alternative' explanation. very kind of you. have a lovely day. thanks again and everybody else also