Mortgage Question

vodkagirl001

Right well I have had conflicting answers regarding this and since we have not even sold our place yet and might not even get this other property I don't want to have to have a mortgage interview just to find out this answer to this little question that I'm sure some of you all seeing all knowing helpful folks on here might know :cool:

Ill give you the scenario - Basically if we bought this particular property for £80k and it needs totally gutting inside so we also wanted 40k to do the property up making a total mortgage of £120k how would we do this, would we

A) Get a mortgage for 80k and at the same time apply for a home improvement loan for 40k

or

Beable to get a mortgage for the full £120k straight away.

I ask because I figured (maybe incorrectly) if for example it gets valued at 80k, and we borrow 80k for the house then in effect we are borrowing 100% mortgage, so if we wanted to take out the other 40k at the same time (so borrowing a £120k mortgage) it would be taking us well over a 100% mortgage and I know lots of places dont do this.

OR would they base the valuation on recent sales in the street of house that have been done up (recently gone between £140-£155k).

I have pregnancy brain and Im easily confused right now so the 2 conflicting answers didn't help me

Doozergirl

You can get a mortgage based on what you pay for the house. You could try and go for a more than 100% mortgage, but if needed a lot of work I don't know reaction you'd get. You wouldn't be able to get near the full 50% more than what you pay for the house though.

imoneyop

The majority of lenders will shy away from this as they will worry about being left with a deralict house worth far less than they lent

However, there are some companies that have special mortgages for property renovations. From memory Norwich & Peterborough are one. They normally lend the upfront part to buy the property and then the renovation costs as a series of staged payments as the work progresses.

vodkagirl001

I thought this was the case - it was not what I was told though. Perhaps it is because I work for the company I would get the mortgage from and I know they offer ''special'' treatment to staff

(Oh I have never worked in mortgages or had ANYTHING to do with them, I work in the IT dept for the company, which is why I don't know the ins and outs about them as we dont even have to know about them in this dept - Just thought I better point that out seen as I said I work for a lender pmsl)

vodkagirl001

Oh and this is probably all in vain anyway cause we wont sell our appt in time no doubt as were the type of people who NEVER have ANY luck lol

Doozergirl

You should go and see your broker because you will need to know exactly how much you can afford to spend when you do sell, even if you do miss out on this particular house.

You can get a decision in principle as soon as you start looking properly. It sets you up realy well for when you want to make an offer as you're already prepared. Otherwise, it's a crazy rush!

You're not wasting anyone's time by seeing someone now. You will be taking out a new mortgage in the relatively near future!

vodkagirl001

Doozergirl wrote:

You should go and see your broker because you will need to know exactly how much you can afford to spend when you do sell, even if you do miss out on this particular house.

You can get a decision in principle as soon as you start looking properly. It sets you up realy well for when you want to make an offer as you're already prepared. Otherwise, it's a crazy rush!

You're not wasting anyone's time by seeing someone now. You will be taking out a new mortgage in the relatively near future!

We have an AIP on stand by from the lender as its on staff mortgage also its on record for us at any time, I just need to nip down to the Lending dept to get the ball rolling as it were should we need to get the mortgage - HOWEVER this AIP was done on a borrowing of £135k as at the time we had no idea how much we would be needing so just did it on the maximum we wanted to spend (we could borrow up to £160k but we feel it silly to whack out your maximum just ''because you can'') At the time this other property was not available and we were not planning on buying anything to do up so never needed to ask work the question however, I guess now is as good a time as any that way if we do sell ours soon, we know straight away if we are in the position to buy the other property or tell them to go a head and put it on the market.