Mortgage advice please!

Bev45

Hello, I was wondering if someone could give us done advice. We are basically moving as we cannot afford our mortgage and debts anymore. We have just sold our house and have found a house which would be half the mortgage. The only thing is this house we've found out is a repossession and needs around 20,000 work, with the asking price and then the work being done, the value of the house will still be around 30,000 more than what we will have on a mortgage. We have been to the bank today and they have said they can only lend us what we are buying the house for (even though its worth more) we are going to speak to an independent financial advisor tomorrow for more advice. What we were hoping to do us have a mortgage for around 25000 more than we are buying it for (which would probably be the price of the house if it wasn't a repossession) to be able to do the work etc. the estate agents have said this wouldn't be a problem and our bank gas said different. I know We've only been to our high street bank so far, but was just looking for some more advice before speaking to financial advisor tomorrow. Thanks! (Sorry for rambling post)

Thrugelmir

A lender will not advance money on the basis of what a property maybe worth. A mortgage is based on the lower of the purchase price or the valuation.

What does the £20k of work relate to?

Bev45

The house basically needs new windows, kitchen, bathroom, flooring, carpets, everything! We've had a rough price and it was 20k. As the estate agent we could do it with the mortgage, we assumed we'd be able too!

Bev45

We thought as the house would be worth as it stands now around 20000 more if it was being sold by a private seller we wouldn't have a problem ??

Thrugelmir

Bev45 wrote: »

The house basically needs new windows, kitchen, bathroom, flooring, carpets, everything!

How much is essential and how much purely want?

Mortgage_Mark_2

Bev45 wrote: »

The house basically needs new windows, kitchen, bathroom, flooring, carpets, everything! We've had a rough price and it was 20k. As the estate agent we could do it with the mortgage, we assumed we'd be able too!

Estate agents can blag a bit.

No lender on earth will lend against a projected value of the property, they will only ever lend against the lower of the purchase price or valuation. Even if you were buying a house for example for £100,000 and the valuation came back at £200,000; that's brilliant...but you'll still only obtain mortgage funding against the lower figure as that's what you're actually buying it for.

In the situation you've outlined above, you'd basically need the funds to do the work yourself, or buy it, and wait for at least six months to see if you can release some equity if the value is, in your opinion, higher that what you paid for it. Be aware though, the sale price will be logged with Land Registry and will be used to consider future values, so if you buy a property for considerably less than market value, it will in turn reduce that market value later on.

amnblog

Bev45 wrote: »

The house basically needs new windows, kitchen, bathroom, flooring, carpets, everything! We've had a rough price and it was 20k. As the estate agent we could do it with the mortgage, we assumed we'd be able too!

This sounds like the kind of condition which will make it unsuitable for lending purposes in any case.

Repossessions are often trashed on the way out.

If it is not habitable, a lender offering standard mortgages won't touch it.

As ever, if you are serious, engage a decent mortgage broker.