FTB - undervalued property

blh2002

Hello everyone.

Right, I'm a first time buyer, some debt, but a 10% deposit. I have an opportunity to attempt to buy a house. I can probably get a mortgage for the required amount. However, it will be at the top of my lending. The thing is, the house does need some work. This would be the whole point of buying it, because there is some value in the house. Now in these cautious lender markets, is anyone interested in this sort of thing? I can give figures if you like, but its the usual 2-4k of building work and decoration, to add about 15k of value. (I am able to buy it before it goes to market, and it would be offered cheaper to me anyway)

My basic question is, as lending the required amount may be difficult, as it is the very top of my possible lending, is the fact of work required likely to complicate things too much? Is any lender likely to consider the potential value as a plus point for me, or is it likely to kill the whole deal (as a FTB with the smallest deposit required and some debt)? Would a broker be able to argue these points better than myself?

Thanks for any replies and advice.

brit1234

If you are at the peak your funds and it needs work done then you can't afford it. However you can haggle the seller about 15% off the asking price prehaps more knowing the work needs to be done.

blh2002

thanks for the reply, I should have been a little clearer. I have the cash for all the work, plus the deposit. The potential difficulty is in getting the mortgage on top. Are lenders interested in 'do up' properties?

The idea of buying is to make the money myself, instead of a builder coming in with a low cash offer and making a tidy profit. The alternative is save for a year or two, and get a bigger deposit, and buy something better. The first option seemed to be a good opportunity to make some cash.

morg_monster

I don't think they will treat a "fixer-upper" any differently to any other house. They certainly won't give you a better survey value or LTV ratio because you may be able to add value to the property. They will value the house what they think it is worth at that time; if that is less than you have offered then you will have a problem.
also if the house is lacking anythign like a kitchen, bathroom, etc, or isn't fit for habitation according to the surveyor, you probably won't be able to get a mortgage at all.

beecher2

I'd question 2-4k of work adding 15k to the value, and I'm sure any lender would too.