FTB mortgage for renovation house

ravravrav

I just had a house viewing today and although I wasn't particularly impressed with the properties the estate agent told me that as a FTB I've got hardly no chance getting a mortgage from a bank for a house which requires renovation/is in an unliveable state. His reasons as to why weren't very clear, can anyone let me know if this is true or not.

fellwalker09

The only obvious reason I can see, is that they would only be willing to lend up to a certain amount. As long as you can make the required deposit, I don't see why they would not offer a mortgage. However, given the present lending criteria and large deposits, you may well find that you have to pay more than 25%. Uncertain how much more, but 40% could be a possibility. Best thing is to talk to a decent broker.

redlady_1

Depends on the definition of renovation I guess. I got one (FTB) but had a deposit to put down. The house had a Belfast sink for the kitchen, together with some worktops, no heating, a downstairs toilet and a shower upstairs.

beecher2

No-one would get a mortgage for a house which isn't livable, ie if it doesn't have adequate sanitation or a basic kitchen

ravravrav

beecher2 wrote: »

No-one would get a mortgage for a house which isn't livable, ie if it doesn't have adequate sanitation or a basic kitchen

So I couldn't get a mortgage for a house which I want to fix up myself? The only way to buy such a property is to purchase with cash?

kingstreet

Some properties requiring full modernisation will be unmortgagaeble. This means you'd have to pay out to buy, then modernise the property using cash.

Others may have a 100% mortgage retention. In these circumstances, you'd have to buy the property with cash, carry out the remedial and improvement works in cash (or have the builder wait for payment) before confirming the works have been done and having the mortgage money released.

In practical terms, you'd need a deposit, plus a lump of cash to pay for work and more to cover any possible retention.

neverdespairgirl

It depends what's wrong with it. Does it have a kitchen and bathroom, no matter how old and feeble?

ravravrav

I think from what you're all saying it's better I save up for a deposit on a house which is liveable...

ravravrav

neverdespairgirl wrote: »

It depends what's wrong with it. Does it have a kitchen and bathroom, no matter how old and feeble?

Well the property I saw today needed everything new - pipes, plumbing, electrics, the lot. There were bathroom and kitchen units but without a doubt they would need changing. I wasn't interested in the property however.

However, I still wonder if I could buy a different property, in similar sort of condition inside, and then buy the house with a mortgage and over the following 2 years get another 20k put aside to renovate it (obviously wouldn't live in the property during that time).

Conrad

You keep asking the same thing, so I thought I'd clarify for you;

1) If the property is 'HABITABLE' you can get a mortgage. Habitable means a working bathroom and kitchen
2) Apart from the kitchen and bathroom if there are major defects such as considerable damp, a lender may decline to lend the full amount you request until the work has been carried out


This is because major defects or a uninhabitable property are considered to be a development rather than an ordinary house purchase.
Lenders have in the past had many problems with such properties where inexperienced owners get into all sorts of trouble.
Also standard buildings insurance must be in place for a mortgage co', but a property in bad condition may not be normaly insurable. So nif it burns down the lender cannot recover thier money.