Borrowing extra..

Zoetoes

Dave_Ham wrote: »

Was just reading thinking no way Halifax was going to advance on this basis and you have got to that point now.#

To be fair to Halifax and lenders in general, they are not going to advance funds on the basis that you have an estimate/invoice and may get the works carried out.

Furthermore, further lending on equity with assumed no deposit put in by yourself; begs the question about interest in the property and motivation to repay. This is why the lenders are incredibly nervous on any additional borrowing.

By the sounds of it, all you currently have is an Agreement In Principle and therefore until you have the mortgage offer, nothing is formally agreed.

Poor show from your broker so far, would be letting them know tomorrow.

Thanks.

Having paid a £315 valuation fee after him confirming to me that the mortgage is secured, I will be very miffed if it all falls apart now!

As for the extra borrowing, I was working on the house being almost double what I've asked to borrow so it not being a big risk, wasn't thinking that actually upon completion the Halifax will own half and the council still will own half.

Senior_Paper_Monitor

The problem is that at the point of completion the property is worth 'X'.

The lender lends 'Y'.

The Council has a claim on (X-Y), albeit this decreases after a year.

You are asking the lender for a further 'Z'.

The lender requires that the council agree that at that point that you complete they have a 'first charge' for 'Y+Z' which in turn means that the Council has to agree to receiving 'X-(Y+Z)' rather than 'X-Y'.

A repossession in the early months (or even years) - particularly if you haven't bothered to do the improvement work - will leave the Council very out of pocket and the lender wants them to agree to it, so they can't whinge afterwards.