First Time Buyer

Sah89

Hi all,

I'm looking for some advice. My partner and I are looking to take out a mortgage in the next few months. We are buying the property from my girlfriends mother. The house is worth between 120000 and 130000 an we have agreed to pay 100000. We have a deposit of 26k to place and are looking to add an extra 30000 on the mortgage to build an extension. Are there any issues with mortgage lenders borrowing extra to complete the improvements? Also are there any issues in us paying below the asking price when lending?

Thanks in advance

kingstreet

Sah89 wrote: »

Are there any issues with mortgage lenders borrowing extra to complete the improvements?

Yes. They don't do what you're requesting.

I suggest you take an alternative approach. Find a lender prepared to accept the transaction as a "purchase at undervalue from a family member." On a normal arms-length transaction with someone you don't know, this is not possible.

You will then buy the property for the valuation amount, with the reduction down to £100k becoming your deposit. No cash deposit is then needed.

The cash you are holding can then be used to carry out the improvement work you desire.

Sah89

Thanks I hadn't considered that. Would it also be an option paying full value for the property then my partners mother could give my partner a gift of the 30k to do the renovations?

kingstreet

Yes. The only thing they can't do is ask the lender to lend them more based on the improved value of the property.