Mortgages incl. Renovation?

Fredula

We weren't eligible for our shared ownership property we were going for so are now looking at other properties. Thinking about it realistically are options are:

1. Buy a 2 bed flat under budget and then have to move on a couple of years down the line
2. Buy a nice house in a rough area
3. Buy a house which needs some doing to it, in an okay area.

We're both swayed towards number three, as we don't really want to move again because it will take forever for us to save up for the fees, etc and we wont want to spend any money on stuff for the place if we know we have to move so, in mine and hubbys mind it's better to do option 3. We already have one child and are hoping to have another one somewhere down the line, so option 3 lets us get a 3 bedroom place as well.

What I'm asking, is if we needed to do a property up, I'm aware that you can get money within your mortgage to do this, but not sure how to go about it? Has anyone done this who can offer advice/opinions? Does anyone know if it's specialist mortgage companies who do this?

Thanks

mrginge

You're not going to be able to borrow more than 95% of the current value of a property. Any renovations will have to be financed by you.

kingstreet

Fredula wrote: »

I'm aware that you can get money within your mortgage to do this, but not sure how to go about it

Please explain what you mean by this.

Lenders lend based on the current value or agreed price, not on what the property might be worth after you undergo an improvement programme.

Renovation projects are difficult to fund these days, you'll need plenty of cash in hand and a specialist renovation product/lender.

Fredula

I thought you could borrow to renovate aswell? Maybe I'm wrong.

We have 25k deposit and are looking to buy a property worth £130k which needs about 10k - 15k renovations.

eviekins

Hi Fredula
I definitely wouldn't want to opt for the house in a rough area, especially seeing as you have a young child (and hope for another in the near future).
I remember reading that you currently live with parents, is there any reason why you can't stay a little longer and continue to save so you can buy what you really want? It sounds like all 3 options aren't ideally what you'd like and you are just settling as you want to buy now?
Regarding the shared ownership, I also personally wouldn't want to go for that either, but that's just my personal opinion! What do you mean by not eligible for it though?
With option 3, I also don't believe you will be able to add extra money onto your mortgage for renovations. You will have to have extra money set aside for this unfortunately.
Out of my savings, about 6k will be for fees, around 14k for furniture and renovations and 5k left in savings as a safety net in case of emergencies (boiler or car breaks etc)
Hope that helps. Good luck!

Okydoky25

Fredula wrote: »

I thought you could borrow to renovate aswell? Maybe I'm wrong.

We have 25k deposit and are looking to buy a property worth £130k which needs about 10k - 15k renovations.

Put down a 10% deposit and use what is left over to renovate.

Also if a property is up for £130k offer £125k and stay under the stamp duty limit saving you £1300.

Fredula

eviekins wrote: »

Hi Fredula
I definitely wouldn't want to opt for the house in a rough area, especially seeing as you have a young child (and hope for another in the near future).
I remember reading that you currently live with parents, is there any reason why you can't stay a little longer and continue to save so you can buy what you really want? It sounds like all 3 options aren't ideally what you'd like and you are just settling as you want to buy now?
Regarding the shared ownership, I also personally wouldn't want to go for that either, but that's just my personal opinion! What do you mean by not eligible for it though?
With option 3, I also don't believe you will be able to add extra money onto your mortgage for renovations. You will have to have extra money set aside for this unfortunately.
Out of my savings, about 6k will be for fees, around 14k for furniture and renovations and 5k left in savings as a safety net in case of emergencies (boiler or car breaks etc)
Hope that helps. Good luck!

My parents have already stayed put for 2 years after I fell pregnant unexpectedly, they want to move to Minehead and want to do it for next April time so we have a year to get ourselves sorted - although hubby keeps stressing that by time we've saved up another 5k the house prices will have increased so we will only still be able to afford houses we're looking at now.

We have a couple of houses lined up to see this week/weekend. I just don't want to end up going for one which isn't right.

Kynthia

I believe that people who have gotten money to renovate from their mortgage lender have done this by remortgaging. You can only do this once you have enough equity in the property, and once your fixed period has ended unless you want to pay the early repayment charge (if you have a fixed mortgage).

Buying, selling and moving costs a lot so it definitely makes sense to buy somewhere that will meet your needs for the longest possible time. However you don't want to stretch yourself financially too much unless you're sure your income is going to increase without your living expenses increasing. Otherwise you will be stretched for years, which isn't fun, and will be in trouble when interest rates rise. It's all a balance.