Borrowing more than property value

Peter1988

Hi All,

Just a quick question, if the bank are willing to offer for instance £150,000.00 mortgage, but the property purchase price only required £140,000.00 could you still take the £150,000.00 mortgage but use the other £10,000.00 as a sort of a loan to better the house/use for whatever necessary?

Thanks

betmunch

Quick answer to a quick question: No

Any follow up questions? Or was that all you needed?

Peter1988

Thanks for your help. That's a shame, will have to try and think about something else.

GMS

Do you have a deposit?

betmunch

Peter1988 wrote: »

Thanks for your help. That's a shame, will have to try and think about something else.

No worries

Annisele

There are very limited circumstances where that might be possible - say the property would be worth £300k on the open market, but your parents are selling it to you for £150k because they want to give you a gift of the other £150k.

Is there anything unusual about your circumstances/sale, or are you just spending £140k on a house from a completely unrelated seller?

Peter1988

well we have a £90k deposit, we don't know the owners of the house we are buying from. It's our second mortgage, alot higher than our first mortgage and with a different lender.

Annisele

Ah. In that case, I'm not sure I understand the question. I thought you were trying to take a loan for more than 100% of the value of the house; now I'm confused!

Are you really asking "I have a £90k deposit, but would it be OK if I just put down £80k and borrowed an additional £10k"? If that's the question, the answer is: maybe.

Assuming a property price of £230k (your £90k deposit plus £140k mortgage) your LTV would be 61% if you put down £90k, and just over 65% if you put down £80k instead. Your lender might be OK with that.

Peter1988

no, the deposit is split between me and my partner, unequally. It was gifted by our parents. By already taking out money for stamp duty on this new property, solicitors fee's etc it's making the deposit and % stake lower. If we then take an equal amount out of our deposits, it makes the % even lower. The only other alternative to get money for 'doing the house up' is taking a loan out, but that works out a lot higher interest than using the mortgage rates.

Does that make sense?

Annisele

What is the purchase price of the house?

Peter1988

£240,000 is the purchase price