FTB: Question about mortgage and home improvement loan

s_b_c

Hi,

This is similar to the question posted in a previous thread but the LTVs there were much higher.

I am looking at a property that can be bought for around £300k based on offers/discussion with estate agent. The property needs about £25k-£30k of repairs/improvements that need to done to it within the next 12 months (ideally before one moves in) as the floor boards need to come up and water pipes replaced.

I can put down a deposit of around £75k on the property so 75% LTV but that leaves me with very little money for the home repairs.

I have been pre-approved for a mortgage (80% LTV) for a property upto £360k and could possibly go higher based on income/affordability but deposit prevents me from doing that.

The question is what is the best way of actually funding the repairs/improvements. I think I could get a personal loan based on affordability if I get the a 80% LTV mortgage on the property and use the £15k remainder towards home improvements but not sure if it is that straight forward to get a mortgage and then a personal loan or the other way around. Is one way better that the other? Maybe I can even use Zopa where I am a lender....

Or should I just look for a different property that doesn't have these complications.

Thanks for your suggestions.

dimbo61

Why do you need a £300K property as a FTB that needs expensive repair work
Why not look at a £250 property and save on the £9K stamp duty bill and have some money left after putting down a 25% deposit which also gets you the best deals

Thrugelmir

s_b_c wrote: »

I am looking at a property that can be bought for around £300k based on offers/discussion with estate agent. The property needs about £25k-£30k of repairs/improvements that need to done to it within the next 12 months (ideally before one moves in) as the floor boards need to come up and water pipes replaced.

More than likely the lender would place a retention on the mortgage to ensure the necessary work is completed. So you may need to find more money initially.

s_b_c

Thrugelmir wrote: »

More than likely the lender would place a retention on the mortgage to ensure the necessary work is completed. So you may need to find more money initially.

Thanks. Will keep that in mind. If I disclose this to the lender will this still be an issue? I should check with the mortgage broker I guess.

dimbo61 wrote:

Why do you need a £300K property as a FTB that needs expensive repair work
Why not look at a £250 property and save on the £9K stamp duty bill and have some money left after putting down a 25% deposit which also gets you the best deals

Two reasons. Most importantly finding a property under 250k in London in the areas I'd like is close to impossible. Secondly, I am looking at properties closer to £350 and the difference between a place for 250 and 350 in terms of build quality and space is huge.

Thanks for the tip on the stamp duty though.

Am open to other suggestions/opinions as well.

Thanks

Thrugelmir

s_b_c wrote: »

If I disclose this to the lender will this still be an issue?

The surveyor valuing the property on behalf of the lender will make recommendations.