Do any lenders let you borrow more than house value?

bsms1147

If you really need to update those two rooms, buy the house and put in a cheap, basic kitchen and bathroom. You'll probably add more value to your house than you spend, and while that doesn't matter in that you aren't selling, you'll be happier living with nicer rooms than the ones that was there already, while you wait and save the money to do things properly, if you still wish to. The money you save from waiting will more than offset the original spend on the 'temporary' arrangement.

matt8787

Yorkie1 wrote: »

OP, what is your plan B if you can't get unsecured lending for some or all of the £50K?

Rob a bank

matt8787

bsms1147 wrote: »

If you really need to update those two rooms, buy the house and put in a cheap, basic kitchen and bathroom. You'll probably add more value to your house than you spend, and while that doesn't matter in that you aren't selling, you'll be happier living with nicer rooms than the ones that was there already, while you wait and save the money to do things properly, if you still wish to. The money you save from waiting will more than offset the original spend on the 'temporary' arrangement.

Hmm, I can see the financial merit in doing that, but that's a lot of upheaval - going through the process of installing basic kitchen/bathroom, only to rip them out further down the line to replace again

matt8787

Ferrisb wrote: »

Speak to an advisor at buildstore - they do financing for self-build and renovation / extension projects.

We were planning an extension and talked through their model with them - from memory, they lend you a proportion of the future value (at a higher rate during the works) and release funds during the work - they work in conjunction with one of the smaller lenders (it may even be Chelsea BS). once finished you port the whole amount onto a more conventional mortgage.

We didn't proceed in the end but it made sense at the time, and would be worth at least talking through with them - sorry my detail recollection isn't great but maybe others can add experiences or knowledge of these products.

thanks for the tip

StuC75

That's just contradicting that you would be wanting to mortgage the property based on it being worth more after the work has been done (ie buy at 275, spend 50 and have a mortgage and LTV of 85% based around the 325 valuation)..

As per ferrisb, that need some kind of lender geared towards such builder \ renovators that would release funds rather then the standard mainstream lender that is geared towards measured LTV's..

matt8787 wrote: »

No, not really - I think its more other posters focusing on increasing the value - our main priority is to build an extension to make the house nice to live in. But I do agree that its worth taking a long term view and look to make improvements that are going to add to the value.

matt8787

StuC75 wrote: »

That's just contradicting that you would be wanting to mortgage the property based on it being worth more after the work has been done (ie buy at 275, spend 50 and have a mortgage and LTV of 85% based around the 325 valuation)..

As per ferrisb, that need some kind of lender geared towards such builder \ renovators that would release funds rather then the standard mainstream lender that is geared towards measured LTV's..

the main purpose of the loan would be to fund improvements to the house to make it a nice place to live in. But at the same time, obviously it makes sense to try and ensure the money you put into the house adds to the value of the house - particularly if this will enable us to get it revalued further down the line and extend the mortgage (allowing us to pay off the unsecured loan)

holly_hobby

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

The 425k is the max amount your income permits them to lend under their affordability matrix - and is a completely separate issue to the max loan permitted on the property itself - they're 2 different things.

The max they will lend on the property, is determined by the lower of the pch price or actual valuation - 100%+ mges have bitten dust, so that options out.

My concern, baring in mind you say it really needs upgrading, is that it may not value up on survey (ie be valued at a lower sum than 275k), either from a straight downvalue based on the comparibles, and/or any noted retention, partial for non-essential, or full for essential works/repairs, which you'll have to meet from your own funds if the vendor is not willing to undertake the works pre completion OR refuses to revise the agreed pch price.

So at the moment, you're running before you can walk, if you're determined to pch the property, the next stage would be for you to submit your full mge application, and for it to go to survey. Once the survey is in you'll know whether you can proceed full stop (if there is no retentions/values up), and then worry how you'll afford to replace kitchens or whatever you want to do, and if you wish to proceed with the pch.

It should also be noted that simply upgrading fixtures and fittings (ie replacing kitchens/bathroooms etc) does not always add value, and to add 50k to its current market value would certainly take some going ..... unless you are also adding rooms/ significant living space to the property with high spec fittings (ie quality kitchen/bathroom refits).

So check your figs and costings are correct and reasonable (ie not undervalued) , inc the likelyhood of securing any planning permissions that may be reqd for any bldg works you wish to undertake, and to bottom all this out before you jump in and start spending pennies you may not recoup on sale . Of course if this is to be a family home for the longterm, and the changes are for your enjoyment/benefit, then you may consider this would outweigh undertaking them solely to add significant value at sale (which may not be the case), and relying upon such to recoup any outlay - just make sure you consider how you'll feel, if after all the outlay, the property value doesn't increase by what you estimate.

Your broker should really be guiding you here, so get them involved.

Hope this helps

Holly x

Debt_Free_Chick

Re the personal loans idea - that may not be an option, in practice.

Once you have the mortgage, your credit records will be linked and the total mortgage will appear on each credit record. When you apply for the loans, the lender(s) will see the mortgage on each record and may well refuse your application. Some lenders may offer a loan - but I rather fear that some certainly will not.

mrchiggles

Debt_Free_Chick wrote: »

Re the personal loans idea - that may not be an option, in practice.

Once you have the mortgage, your credit records will be linked and the total mortgage will appear on each credit record. When you apply for the loans, the lender(s) will see the mortgage on each record and may well refuse your application. Some lenders may offer a loan - but I rather fear that some certainly will not.

I had no issue getting a £50k personal loan with a £220k mortgage on the books - we went to our own bank who tend to have more of an insight into you...

Prothet_of_Doom

If you can afford a mortgage on a £425K house, then you can afford to save. I'm seeing that as a £150K extra mortgage which would cost what per month ? £600 ? £7000 a year so 7 years to save up. Try saving more than that and target saving it up in 4 years. Try saving £1000 plus a month.