Additional Lending / Further Advance etc

vodkagirl001

Well I asked this question in the wrong thread before and I had a few replies but thought I would repost in here to see if an specific mortgage gurus can answer further - I can't get to the Branch to ask the MA's for 2 weeks.

Right there are 2 possible scenarios and Figures are fictional right now :

Scenario one : Property is Valued at £120k, we can purchase however for £80k. We apply and receive mortgage for £80k but want a further £40k to do the property up (taking it up to the current £120k valuation) can we apply for Additional Lending for the 40k and are they likley to lend us it based on the valuation?

Scenario two : Property is Valued at 80k - we get 100% mortgage for the full 80k - how can we get the extra 40k?

Do the valuers do the valuation SOLELY on the property its self OR do they also look at what others are going for on the same street? For example, if they walked in to this property, they would know that someone was buying it to ''do it up'', other house on the street at the moment are going for between £145k and £160k as they are modernised, so would they value it at a kind of ''inbetween'' price there for allowing us to get this Further Advance?

On another note, if we bought at 80k (and it was valued at 80k) and we put in 10k for the works to do the basics (ie rewired, re plummed and plastered) would this then increase the value a great deal for us to then apply for a further advance?

I'm blumming confused lol

mhay_3

first of all i have to say i like the name!

secondly i'd have to ask why is it you are getting a property worth 120k for 80k?

vodkagirl001

mhay wrote:

first of all i have to say i like the name!

secondly i'd have to ask why is it you are getting a property worth 120k for 80k?

LOL yeah good name

They were estimated figures, but its a personal family sale and if we buy it we would be getting it at a lower price than valued as the family want to help us out.

Like I say though those figures were just for the scenarios.

Basically what I want to know is, If we can buy it for cheaper than the valuation can we get a mortgage for the full valuation - or a mortgage and Aditonal Loan for the valuation figure?

ccygirl

In my experience a surveyor never values the property at more than the agreed price. The lender equally will only lend a proportion of the agreed price or valuation whichever is lowest.

If you need to borrow more, what about a more than 100% mortgage there's alot about them in the press at the moment. If not the you would have to get an unsecured loan and they are generally more expensive.

vodkagirl001

Thanks CCYGirl.

I think ill have to wait untill we can get to see a mortgage broker

HelpWhereIcan

While ccygirl is correct that most lenders will base their maximum loan on the lower of the purchase price or valuation, there are lenders who will use the market value when it is a family sale.

There are also lenders who will provide mortgages above 100%, but they are likely to prove more expensive.

Another way (which may prove to be the better long term value) would be to use a lender to get the initial 80k to buy the place on a deal with no ties before remortgaging using the market valuation of 120k to raise the required additional funds and get a good deal for the long term. (90/120 = 75% which means some v attractive deals would be available).

Not quite sure why you would wait 2 weeks to go and see a branch adviser (by which I presume you mean the branch of a major lender) when you should be able to find a broker who will be able to assess offerings from the whole of the market in less time.

Good luck anyway and Hope this helps

vodkagirl001

HelpWhereIcan wrote:

While ccygirl is correct that most lenders will base their maximum loan on the lower of the purchase price or valuation, there are lenders who will use the market value when it is a family sale.

There are also lenders who will provide mortgages above 100%, but they are likely to prove more expensive.

Another way (which may prove to be the better long term value) would be to use a lender to get the initial 80k to buy the place on a deal with no ties before remortgaging using the market valuation of 120k to raise the required additional funds and get a good deal for the long term. (90/120 = 75% which means some v attractive deals would be available).

Not quite sure why you would wait 2 weeks to go and see a branch adviser (by which I presume you mean the branch of a major lender) when you should be able to find a broker who will be able to assess offerings from the whole of the market in less time.

Good luck anyway and Hope this helps

Hey,

what I have highlighted in bold is what I was planning on doing. Well the main option I was thinking was get the mortgage @ 100% for the full 80k, we then use 10k of our savings (which is set aside) to do up the basics (electrics, Plumbing and plastering etc) then get it re valued for a re mortgage at the £120k - so it seems if that is my idea, your saying that is something perfectly ok to do, I was just wondering if you ''can'' remortgage so quickly as it would probably be a few months after the initial 80k mortgage!

its 2 weeks before I can get to see a MA at the branch because Im working (12 hour shifts) AND I work for a building soc (dont worry i came straight in to the computer dept and have nothing to do with the mortgages thats why im not savy on the 'whats allowed'' or not lol) and we currently have a staff mortgage, and if I did the plan above, I could get staff mortgage again, no fees that way for valuations and for the finishing that product early for the remortgage a few months later, but I was not sure on the over all policy.

I didnt want to do a 125% mortgage TBH and would rather stay away from that where possible!

Also I think our BS has some of the best rates available at the moment anyway so if I do what ive said above, when I re mortgage, I would go for a ''normal'' product as the staff mortgage is not particularly competitive at the moment apart from the no fee's thing!

Phew - you have eased my mind a bit now, knowing I can do the 80k then re mortgage thing - cheers chick!