LTV Question

Kingsd316

Now this may be a stupid question but if you wanted to borrow slightly more money for home improvements due the house needed upgraded (double glazing new kitchen etc) how do they calculate the LTV percentage for example

Deposit of £50,000
House Value £200,000
but you want to borrow £170,000

would the LTV be 85% in this example, I can see it looks simple but is there anything the bank does to take into account that you want the extra for home improvement or would they just say we will give you £170,000 and you use £30,000 of your money for the rest and the £20,000 for improvement?

What im trying to do is get my LTV under 80% for better rates, but i need to borrow more to improve the house even though i would have a sizeable deposit

Thanks

Wutang_2

On that basis, you are using 30k towards the deposit and then holding back 20k for improvements.....85% LTV (£170k mortgage on £200k property). All this means is your rate probably won't be as good.

de1amo

the valuers are becoming the fly in the ointment it seems in these ltv things--they are undervaluing to push the ltv up and thus make the lender extra money!

redpete

It has to be 85%, otherwise you're asking the lender to take into account the increase in value that your improvements will add. They have no guarantee that you will spend the money on improvements, and before the work is done they have no guarantee of how much value they will add.

dimbo61

Spending £20,000 on home improvements might not add one penny onto the value ( think drive by valuations)
What you think is a great £10,000 kitchen the next person ( your buyer) might not.
Better to get the best LTV and 75% deals long term and pay for improvements when you can afford them

de1amo

Dimbo you just about summed up the whole credit crisis--all those home improvement further advances in the USA that ended up as reposessions

Kingsd316

dimbo61 wrote: »

Spending £20,000 on home improvements might not add one penny onto the value ( think drive by valuations)
What you think is a great £10,000 kitchen the next person ( your buyer) might not.
Better to get the best LTV and 75% deals long term and pay for improvements when you can afford them

This is true but some things that need doing are urgent so the property can be lived in, so it will def improve the value of the house

Wutang_2

dimbo61 wrote: »

Spending £20,000 on home improvements might not add one penny onto the value ( think drive by valuations)
What you think is a great £10,000 kitchen the next person ( your buyer) might not.
Better to get the best LTV and 75% deals long term and pay for improvements when you can afford them

You have assumed they want to add value to the house price.

de1amo

if the valuation was correct that the lenders surveyor did they should have witheld funds if it wasnt habitable--i would logically guess

Dan_1976

If it is not habitable they will not lend at all. They will lend on its current state.

Note today Nationwide say prices down. RICS doing a good job I think. We need to prevent house prices flying up and increasing personal debt.

de1amo

i think thats kind of bolt door stable while horse is cavolting over the horizon! the RİCS valuations pumped the market up --maybe they will have to earn their fees and actually enter peoples homes in future!