Do any lenders let you borrow more than house value?

matt8787

Hi

Does anybody know of any lenders who will lend more than the house value? The reason being that we'd like to add an extension / redecorate our house.

Here's our situation:
- 1st time buyers
- Offered mortgage in principle up to £425k (Chelsea BS)
- Have had an offer of £275k accepted on a property
- Property is in need of updating
- We have enough funds to cover 10% deposit / stamp duty / moving fees
- Chelsea allow you to add an additional loan to your mortgage after 6 months, but only on the basis of you having a max 85% LTV mortgage

Any ideas?

thanks

kingstreet

No-one.

There are no products offering more than 95% of the value of the property.

The only way to improve the property is purchase it, use alternative borrowing or savings to improve it, then remortgage to repay the existing mortgage and other borrowing, based on the new value.

Some lenders won;t look at a remortgage within six months of purchase and ensure you will add as much value as you need.

matt8787

thanks

So can I ask, is it possible to tell the maximum 'additional loan' amount Chelsea would be willing to give us on top of our mortgage after six months?

Here's the details - page 4
http://thechelsea.co.uk/documents/mortgages/CBM1981AL.pdf

kingstreet

No idea.

Sorry.

opinions4u

Northern Rock used to.

matt8787

I was thinking that perhaps we look to find the extra deposit money to give us an 85% LTV, with a view to then being able to get the additional loan on top of the mortgage after six months - but unless the 'additional loan' amount is going to be £40-50k extra, it may not be worth doing this way

Foxy-Stoat_3

Why not reduce your deposit a few thousand and have a higher LTV out the outset - oh wait, you want to redecorate and build an extension on your first home....so that will be £15-£30K then....what about buying a bigger house to start with, as you say you can borrow upto £425K....

matt8787

Foxy-Stoat wrote: »

Why not reduce your deposit a few thousand and have a higher LTV out the outset - oh wait, you want to redecorate and build an extension on your first home....so that will be £15-£30K then....what about buying a bigger house to start with, as you say you can borrow upto £425K....

We'd ideally like to buy a house that we can put our own stamp on / add value to, rather than pay a premium for one that has been done up to someone else's liking (where we would inevitably want to change things but not have the spare cash due to the higher monthly remortgage payments)

Foxy-Stoat_3

You can buy the house and live it in for a few years while you get used to paying the mortgage and save up for the decorations etc, as these will be fairly cheap to do....if you want to chuck £40-50K extension into this then you need to make sure it will add at least £50K in value or it won't be worth doing. Assuming your thinking of extending out and up taking advantage of the lack of planning approval at the moment. Adding another bedroom, bigger kitchen etc will add value, how much will depend on the research you do and the market, but I would do a lot of research as it may not reach the value you hope to achieve.

As you won't be able to get an unsecured loan on £40-50K then your only option is to remortgage but if your LTV is 90%, then this isn't going to happen right away.

The days of 100%+ mortgages are long gone.

matt8787

hmm, frustrating that they'll lend me up to £425k for a house, but not an extra £50k to bring the value of a £275k place up to £325k value

eskbanker

matt8787 wrote: »

hmm, frustrating that they'll lend me up to £425k for a house, but not an extra £50k to bring the value of a £275k place up to £325k value

Well yes, but if you see it from their perspective, they're prepared to lend £425K only if it's secured against an asset worth £500K, so borrowing £325K secured against a £275K asset (to start with) and even £325K (ultimately) is an entirely different equation!