Staircasing to 100% - some advice needed

carnut1234

blues wrote: »

I am going through the same procedure at the moment. The work I have done to the property has been taken into account, but they don't deduct the full amount. So, I have spent 10k on a new bathroom & kitchen and the housing association has deducted 5k from the current valuation. Their explanation was that 10k spent on a property adds value but not the full 10k which makes sense,

Hope that helps & good luck

Ah great nice to speak with someone who is going through the same thing.

Ok well the house we bought was valued at £152k in feb 2013, house prices in the area havent really moved but if the house was untouched it would be worth a max of £156k at this point.

We have spent about £15k and have done a lot of work. most materials were trade and ive done most the work myself meaning ive kept the budget low. looking around i think the house is worth £180k - its being valued privately in 2 weeks just so we know what its worth.

So in feb 2014 i want to then buy the remainder of the house. so if the housing assosiation are basing the valuation on the property excluding work that has been done then as said the house would be worth about £156k meaning the money we have spent and the alterations done has increased the value of the house by about £24k so when the housing association do there valuation there is no way they can say for example that excluding our alterations they are valuing the house at £175k as the house wouldnt have been worth that much if we didnt do the work.

I hope this makes sense.

they have to base the house on the way it was before we touched it and from feb 2013 to feb 2014 the house would at the most be worth £156k untouched. weve done a lot of work and its worth £180k.

this will be my arguement anyway.

a question to all: Is it possible to find out house much property has increased in value in my area from feb 2013-feb 2014? If so then this would be able to help me when i come to buy the house as they should really only value the house at £152k plus the increase in property from feb 13 - feb 14.

i really hope this makes sense.

carnut1234

Hi All, the jargon is very confusing, sorry im struggling to understand. mortgages are very complicated.

so to answer some of the questions. I wont really have anymore money to add, It is possible i might be able to scrape £3k together at the most to add.

The way i thought it would work is: the houseing association would allow me to by the house at about £156k as they will be valueing the house at the condition it was before we renovated it.

so the value i will need to purchase the house on is £156k BUT the true value of the house is £180k as we have renovated it so dont i have the equity that we have made plus my original deposit of £6,250 to put towards a re mortgage.

equity made: £24,000
original deposit: £6,250
Total:£30,250

value:£156,000
equity & deposit: £30,250

Amount to lend from mortgage provider: £125,750

This is probably incorrect but this is how i thought it would be assesed when i went to buy the whole house.

kingstreet

So, you are assuming the lender will take the value, not the purchase price?

Have you checked this?

If we assume the purchase price is £156,000 and you are purchasing the other 75%, that means you will need;-

£117,000 to purchase equity
plus
£30,000 approx outstanding mortgage balance

_______

£147,000 total borrowing.

This is all going to hinge on how the lender views the value v purchase price issue here.

carnut1234

kingstreet wrote: »

So, you are assuming the lender will take the value, not the purchase price?

Have you checked this?

If we assume the purchase price is £156,000 and you are purchasing the other 75%, that means you will need;-

£117,000 to purchase equity
plus
£30,000 approx outstanding mortgage balance

_______

£147,000 total borrowing.

This is all going to hinge on how the lender views the value v purchase price issue here.

Doesnt the lender go by the purchase price not the value price.

for instance when people who are desperate to sell a house will take a reduced price to sell quick. so the person buying the house would only get a mortgage on what the agreed purchase price is not the actual value of the house.

kingstreet

It's usually the lower of purchase price, or valuation.

In which case, IMHO, you would get no more than 90% of £156,000, or £140,400.

jacobtheamish

kingstreet wrote: »

£150k mortgage on £156k purchase price is 96%.

Are you expecting the lender to take the value, even though that's not the purchase price?

I was working on the basis the property would be worth 180k as the OP had originally stated based on work done etc. Hence I based it on 160k loan being 88% ltv.

kingstreet

Does lower of PP or Val not apply then?

carnut1234

but if ive made £24k on the house and i have my original equity of £6,250 which is £30,250. thats over 20% deposit isnt it.

kingstreet

It is if the surveyor agrees with your valuation and the lender takes the valuation and not the purchase price.

jacobtheamish

danieljephcott wrote: »

but if ive made £24k on the house and i have my original equity of £6,250 which is £30,250. thats over 20% deposit isnt it.

LTV is the amount of the loan versus the value of the property. When you look to purchase 100% of the house, you will in affect be requiring a remortgage. On the application you will provide value and loan amount required. The loan amount required will be based on what the HA want for their 'share' plus the mortgage you already have.

Any mortgage app will be subject to survey, the surveyor will down value if you state the value higher than its true figure.