First time buyer-Can you add extra on mortgage loan for refurb?

pepperparsons

Hello,
I am going to ring nationwide tomorrow to ask but thought someone here may know the answer. We are currently looking for our first property and we have an offer in principle of £175,000, with our deposit of £10,000. Potentially they can offer a ridiculous amount of £272,000 but we don't have a deposit for that.
If we want to buy a property that requires refurbishment-new kitchen and what not, can we increase the mortgage amount to account for it?
So if the property is £175,000 for example and we needed say £10,000 for do it up, can lenders add it onto the mortgage so the overall lend is £185,000? Which is still well within the range they were willing to go up to.

Or is this all a separate thing? We are very new to this buying thing so it may seem a silly question but I have no idea about it.

thank you!

divadee

It would depend on the valuation of the property you wished to purchase.

Personally I think you need to think long and hard before getting extra mortgage/loans for work on a house. Save up for a while and then do the work.

Also your deposit seems very very low for that high a mortgage amount.

pepperparsons

Yep we are not keen on buying a place that needs too much work but it was just something that crossed my mind if we were to need to replace a kitchen or bathroom.
We have a save to buy account with nationwide where you are able to apply for a 95% mortgage within 6 months and 3 years of opening the savings account, as long as you have been regular savers.
The interest rate isnt too fab, 5.69% fixed rate but, it works out the monthly payments are just £50ish more than we currently pay to rent and we can afford it.
We deffo wouldnt want an extra loan or anything like that though. Thats why I wondered if this is an actual option that people do.
We certainly will not be looking for major doer uppers!

_Andy_

What you're wanting to do is borrow more than the valuation, which isn't possible.

Thrugelmir

pepperparsons wrote: »

If we want to buy a property that requires refurbishment-new kitchen and what not, can we increase the mortgage amount to account for it?

Simply put, No. The mortgage advance is purely for the purchase of the property as it currently stands.

You would need to obtain an unsecured loan if you wished to spend money on refurbishing the property at the outset.

Once you've built some equity in the property. Then options will start to open up. Though this may take some years.

pepperparsons

Ah right ok, thank you for the help! Still lots for us to understand on this whole business. :-)

_Andy_

pepperparsons wrote: »

Ah right ok, thank you for the help! Still lots for us to understand on this whole business. :-)

Yep it's a bit of a minefield! Any other questions let us know

aylithuk

Normally after you make your 1st payment on your new mortgage you might be able to apply for 'extra borrowing' (or that is what NatWest call it) and then add an extra 'loan' onto the mortgage.

kingstreet

A lender will lend a percentage of the purchase price, or valuation, whichever is the lower. If the agreed price for the property is £100k, it will lend, say 90% of that, £90k.

If the surveyor values it at only £95k, you'll then get a maximum of 90% of £95k, which is £85,500.

Lenders simply don't lend even 100% of the property price today, so there's zero chance of more than that.

You won't be able to get further borrowing until the value of the property increases if you borrow the maximum loan to value at purchase.