Using mortgage for improvements

jperkins4

Hi,

I am a first time buyer and have a max budget of £175,000, this is important as I have a deposit of £35,000 meaning I benefit from a 20%ltv rate.

I am debating a property at the moment that's on the market for £175,000 however needs some renovating so am looking to bargain down to £165,000, if I manage this is it possible to take out a mortgage on the same principles as above but use the remaining £10,000 that has come off the property price to pay for the necessary renovations needed.

If so it seems perfect for me as it will remain in budget and I can set it up how I want.

Prior to this I looked into simply lowering my deposit to £25,000 however I slip below the 20% rate and so pay a lot higher interest meaning it is not financially worth it for me.

Any help will be appreciated.

Thanks

tizerbelle

AFAIK all mortgage companies will work from the valuation determined by their valuer / the proposed purchase price whichever is lower and will calculate the LTV based on that figure.

So no, what you want won't happen. If its valued at £165k and you need 80% LTV (not 20% - it is loan to value not deposit to value) then you'll need to pay £33k deposit against a £132k mortgage.

kingstreet

Put down a smaller deposit and use the money you keep back for your repairs.

It'll mean higher mortgage payments for a couple of years, but then so would a bigger mortgage.