Mortgage and home improvement loans

suzyp1982

My brother and his girlf are FTB, yesterday we went to see a house that needs an awful lot of work doing to it:
New roof
damp proof course
re-wiring
central heating & Rads
dry rot treatment
new ceilings
re plastering throughout
windows
new bathroom new kitchen
then the usual decoration

Its on the market at 123,375 (reposetion by bank) my brother and his girlf decided that they want to put an offer in of 105000. Mortgage is agreed in principle by Natwest (100% graduate mortage)

BUT.... as i said before they need all this work doing to it, do you think they would get a home improvement loan of £20k to do this? bear in mind once all the work is done the house will be worth £170-180K (the value of the said street)

What they are hoping to do is take the loan out for 25 years, but then when they come to remortgage in 2 years, pay off this loan in the mortgage? (so effectively there mortgage would be £130K) can this be done?

any advice would be greatly appreciated

thank you!!!

Barney088

Best check with Natwest first. WOuld they want a property in this state, many lenders would insist that the property is in better condition. A few things here and there are OK, in isolation damp proofing would not be a problem with many lenders. However with all these things wrong they may balk at the idea. Dry Rot, and new roof rig alarm bells with me.

If the lender has a brain they will ask how can you afford the work? Some lenders don't think but the majority will ask the question, if a loan is mentioned then the lender will need to know that the clietns can afford the loan and the mortgage.

Check Nat West first.

Another option is a self build loan, sounds daft but it may be worth a go. Yes, the property is almost finished but if you look at it as a project, you have the land, the foundations and walls, gutting it in the way that you write may take it back a few "stages". A self build lender would release money as the project goes on, normally in 5 stages. Your brother is at stage three and will be needing money at stage 4, to fix the damp etc and stage 5 to finish off the property. Maybe seak out a local broker who would relish the opportunity to get involved with something a little out of the ordinary!

Good luck