Using mortgage for home improvements

MrOrchard

Hello,

I am thinking of doing some hefty home improvements and would like to know if I can borrow against the Future value of the house rather than current value in order to complete the work.

The situation is simplified a bit - the neighbours with an identical house have done the work we want to do, so the "finished product" is available for a mortgage company to value...

Affordability shouldn't be a problem, we bought our current house for £222k in 2011 (First time buyers), and since then our combined salaries have increased to £121k per annum from around £90k per annum when we bought.

Any advice? Thanks!

dimbo61

In a word NO!!!!!
Future Value ? You might spend £30,000 and decrease the Value!
Save up for the work or pay for it in stages with you earning £121K a year

MrOrchard

Thanks, I wasn't sure if it was possible or not - LOTs of conflicting information (plus they seem to do it on grand designs all the time ). We need a shorter term solution with a new baby due next year, which doesn;t give us enough time to save what we would need.

We're unlikely to decrease the value, the neighbours house with the work has just been valued at £325k, so it's added 50% value for the investment.

Prothet_of_Doom

I paid for my Loft conversion with an extention to my mortgage. We had no discussions about the future or current values, but I guess that the time, we had 40% equity, and the loan took it down to 30%, except that the value probably took it back to 40%.

This is exactly the sort of thing that lenders are usually happy to do. You show them the plans, explain how the value will be improved, and they lend you the money.

kingstreet

Additional borrowing is fine as long as you have the equity in the property now. They will not lend against the improved value.

Alternatively, you can get a loan or use savings, then apply for additional borrowing or a remortgage after the work is done, then the improved value will be what's used.

MrOrchard

That's great advice, thank you.

StuC75

What it has been valued at and what someone is willing to pay are 2 different matters (see other threads of people looking to sell)...

How much are you looking to lend and what is the current loan to value - i.e. any current equity to 'tap into' with a re-mortage..

MrOrchard wrote: »

We're unlikely to decrease the value, the neighbours house with the work has just been valued at £325k, so it's added 50% value for the investment.