Mortgage/Loan/Re-Mortgage

btbloke

Please can some-one offer some advice as this is really stressing me and my wife out. We're 1st time buyers and have recently had an offer of 160K (we knew the seller who gave us a huge discount) accepted on a bungalow that needs a new kitchen/bathroom and redecorating. We're hoping to spend 10K on it to make it liveable and it should then be worth in excess of 190K (maximum debt of 170K so if desperate we could sell and have 20K left over).
We're not in it for profit but it is comforting to know that we can almost guarantee some equity once we've done the work. (by the way, I know there's no guarantee that property prices won't fall but I can't cope with paying £800/month rent anymore!
)
However, because our mortgage is based on affordability I can't get anything above 95% of the value from the mortgage company. We're thinking of getting a loan for the 10K maybe over 15years to keep the repayments down knowing that as soon as we can we will remortgage/add the loan to the mortgage payments.

Does this sounds like a good idea? I would get an interest free on purchase credit card but I think the minimum payments would be too much.
Can anyone give any idea how long we would have to wait before the mortgage company would be willing to let us add the loan?

I can see that it sounds like i'm speculating to accumulate but it's so stressfull my wife thinks that it might not be worth the hassle.

please help

Ian_W

Hi Mark,
I'm not a broker or mortgage professional but an experienced consumer. Take it from your post that you have no savings to act as deposit? The difficulty with borrowing the deposit is that the lender may want to know where it's come from, it may appear on your credit search etc. If they won't lend you more than 95% based on affordability before you borrow the deposit, they're not likely to afterwards.
Why are you tied to this particular lender? There are many who will do 100% or even more using a tied-in unsecured loan from them. Again they will have their own lending criteria but this does vary.
If you haven't already, I'd read martin's articles on the mortgage section and get a local fees free, whole of market broker to advise if there is a lender better suited to your needs and requirements. Possibly also give L&C a call and see what they can offer.

CheeseOnToast

I think he has the 5% deposit but is referring to the 10K to do the place up when they move in ?

btbloke

Thanks for your comments so far, you're almost correct C.O.T. I have borrowed enough for a deposit from my Dad so there are no monthly repayments and I will repay the whole amount when a) we sell or b) we remortgage. Therefore the debt will not show on any credit searches.
I have looked at a number of mortgage companies and the deals that they will offer and not a single one will give me 100%. My income is approx £25K so based on earnings I can only get just over 100K at a push. In this area that would only buy a studio flat.
I know that getting into debt really isn't a good idea but this seems like the only way for me to get on the ladder. At least buying this property and doing it up will allow me to repay my Dad and the loan and still have enough to put up my own deposit for the next place I buy. Am I wrong to presume that it should be fairly easy to get a secured loan for 10K once the mortgage has gone through? If I'm likely to struggle to get one then I won't really be able to buy the property, but I can't apply for one until after the mortgage has gone through as it will show on the credit check.
The sums that I have worked out in my head are £730 mortgage repayments, £80 loan repayments plus extras for life assurance and buildings insurance. This is affordable for me as it's only a little more than my rent but I would need the loan.
Any ideas?

ps not sure why it shows Mark at the bottom of my original thread, I'm Darren