Taking a mortgage out more than house value

coxyrach100

Hello

I am a FTB and have been offered a mortgage in principle with Nationwide of £90,000. I have £10,000 saved for a deposit and now getting together money for fees etc.

Can anyone tell me if I get a house worth £90,000 and put my £10,000 deposot down so my mortgage will only be £80,000, can I still take out a mortgage of £90,000 for updating and repairs to the house?

The houses in my area in my price range all need updating with new kitchens and bathrooms and once I start paying bills and mortgage every month I won't be able to foot the cost of these.

Thanks

Rachel

maninthestreet

No you can't.

girl_withno_name

I think cattie answered a similar question well here: http://forums.moneysavingexpert.com/showpost.php?p=53671223&postcount=2

An alternative option may be to look at a separate loan for the upgrading work? I'm not sure how lenders would view this and the impact the loan/mortgage could have on each other. You'd obviously have to carefully consider the repayment costs of both, especially if budget is tight.

brit1234

I think you are talking about a 100% which are effectively now gone so no. However its going to be a complete buyers market over the coming months so you have a good chance to haggle the price down.

coxyrach100

Can they not add it as a secured loan or something on top of your mortgage. I would still be putting £10k down in deposit so in affect would still be a 90% mortgage.

picklepick

Nobody is going to loan you money for the exact amount your house is worth. If you default on your payments how are they going to recoup their costs?!

What you're suggesting would be the same as the bank giving you a 100% mortgage and you keeping your 10k. It makes no sense!

Jimbo1976

It is unlikely that you would be able to get a secured loan for the extra £10,000 as despite you putting in a £10,000 deposit that is not a lot of equity.

I know you are entering this with the best intentions but if for some reason you didn't pay your mortgage and the property was repossessed the changes of the second charge lender getting anything back are minimal.

girl_withno_name

coxyrach100 wrote: »

Can they not add it as a secured loan or something on top of your mortgage. I would still be putting £10k down in deposit so in affect would still be a 90% mortgage.

They may be willing to loan you an additional £10k, although I suspect it would be unsecured (or, at least, not secured on the property)... this is different to the situation you asked originally though, which suggested you wanted a 90k mortgage for a 90k property.

RenovationMan

If your alterations are going to significantly increase the value of the home once complete, a lender might be prepared to base their valuation on the enhanced value of the house rather than the current value (pre-alterations).

So if you found a house for sale at £60k but £8k of alterations would add £8k or more to the house value, the lender might advance you a mortgage of £68k.

You might struggle to find a lender prepared to do this in the current financial climate, but I was offered this when I bought my first home. I bought the house at £40k with a £2k deposit but the lender valued it at £45k in order to give me £7k to renovate it (I didn't bother in the end as I wanted a lower mortgage).

coxyrach100

Ok, thanks, so basically i just have to save an the extra to do repairs! Bring back 100% mortgages! house buying and saving is way too hard for ftb!

BitterAndTwisted

I doubt we shall ever see 100% mortgages again in our lifetimes, if ever. For very good reason