Daft Question for a FTB

shie6523

Hi,

We have a full mortgage approval from Yorkshire Bank for a property up to the value of £165k after saving up a 10% deposit.

We’ve seen a house which we like but it needs some work doing to it – namely replacing the existing heating system which I’ve been told is an expensive job. With us being first time buyers we don’t have the money to replace the heating system and would use any money left over from the deposit to pay solicitors fees. We would be looking to agree a price of £140k on the property thus leaving us £2.5k to cover the previously-mentioned fees.

My question is this:

Let’s say we agree a price of £140k on the property. This results in a £14k deposit, a £126k mortgage and £2.5k left-over to cover solicitor’s fees. If we wanted to borrow an additional £5k from the Lender to carry out the necessary improvements this would result in the mortgage being £131k – is it possible to do this? I know it would affect the LTV ratio increasing it from 90 to 93.5% but I’m unsure of how it all works after that. Also, how would the additional £5k be made available for us to use on the improvements?

Many thanks.

kingstreet

No. You can borrow 90% of the lower of purchase price or value and you can't borrow more to do repairs or improvements via a mortgage.

You would need a 95% mortgage and use the reduced deposit to fund the costs.

ACG

You MAY be able to take out a loan after the mortgage completes in order to do the central heating, but would you want to rely on that being accepted just as you are entering winter?