Buying and converting, how do you finance it?

katmcleod

I just have a general question I was hoping someone could answer.

We're looking at buying soon and need 3 bedrooms. We rent a 2 bed just now and it's great, loads of people convert the loft into a third bedroom. If we only owned this place it would be ideal.

So I wondered if we could buy a 2bed and then convert it, but how would we finance it?

Say we agreed with the bank we could borrow 150k for a mortgage and found a 2bed for 100k and 50k would rennovate it, could we do it?

Would it be part mortgage, part loan, or a mortgage based on the finished value of the house, or is it not possible until we build some equity?

Would just like to know if it's an option

katmcleod

Anyone have an idea?

PasturesNew

Roughly speaking, you need a lot of money yourself.

Probably a common route would be:
- buy a house for £100k, putting down at least a 10% deposit (more is good)
- raise separate finance to do the work (IF you can get it)
- once the work's done, get the house revalued (hopefully more than £150k), then remortgage at the higher rate (again needing the pre-requisite 10% deposit, or more)

The money isn't free-flowing. You need to be able to lay your hands on a lot and take a chance that the end result will be worth more than you've spent (which can be touch and go, especially with a loft conversion).

katmcleod

Sounds like it's not really worth considering, there's an awful lot that could go wrong.

Thanks for replying, it's good to know