More on mortgage than house offer

Guru86

Hello

Please mind my stupidity but I have ist had a offer accepted on a house we want to purchase. We have it accepted at 156 now I am wanting to take a mortgage out at 175 to cover renovation work that needs doing on the house. We will be getting a 95% mortgage will this at all be possible or not?

Thank you

Paully232000

I don't think this is possible, your mortgage company would give you 156K minus whatever loan to value you have agreed to.

So at 95% LTV the mortgage company will give you £148K.

Malmo

Guru86 wrote: »

Hello

Please mind my stupidity but I have ist had a offer accepted on a house we want to purchase. We have it accepted at 156 now I am wanting to take a mortgage out at 175 to cover renovation work that needs doing on the house. We will be getting a 95% mortgage will this at all be possible or not?

Thank you

You would only receive the Loan-to-Value (LTV) amount based on the lower of:
1) the agreed purchase/sale price (assuming £156K) OR
2) the lender's valuation, if this is less than (1). If your lender’s surveyor decides the property is worth only £146K for example, the bank will advance only the LTV of this lower amount, leaving you with a shortfall.

stator

Guru86 wrote: »

Hello

Please mind my stupidity but I have ist had a offer accepted on a house we want to purchase. We have it accepted at 156 now I am wanting to take a mortgage out at 175 to cover renovation work that needs doing on the house. We will be getting a 95% mortgage will this at all be possible or not?

Thank you

Sorry what you're wanting is a 112% mortgage and those are no longer available since Northern Rock went bust a few years ago
Be careful since houses in need of renovation may not pass your lenders mortgage valuation survey. It's quite a risky area to be operating in.

pinkteapot

Guru86 wrote: »

Hello

Please mind my stupidity but I have ist had a offer accepted on a house we want to purchase. We have it accepted at 156 now I am wanting to take a mortgage out at 175 to cover renovation work that needs doing on the house. We will be getting a 95% mortgage will this at all be possible or not?

Thank you

This question is going to sound really rude, and I don't mean it to be at all, so bear with me...

What do you think the 95% refers to? I.e. £175k is 95% of what?

It sounds like you've misunderstood something pretty fundamental - as others have said what you're actually asking for is a 112% mortgage.

As I said, I don't mean to sound rude - just trying to help. If we can see how you've worked out the 95% we'll be better able to explain where you've gone wrong.

Guru86

I think I misunderstood too. I was originally thinking get a mortgage for 175k which I have 95% deposit for. This was in order to have extra money to do extension etc

But now I understand can only get the mortgage for 95% of 156k the accepted offer (pending valuation report.)

pinkteapot

Yep! :money:

lovinituk

Guru86 wrote: »

I think I misunderstood too. I was originally thinking get a mortgage for 175k which I have 95% deposit for.

So you've got a deposit of £166250?!

I suggest you have a chat with a broker who can explain everything to you before you make a costly mistake.

kingstreet

Yep. You can borrow upto 95% of the lower of purchase price or valuation.

Once you've purchased the property, you can then carry out your improvements, but you would need to fund this yourself.

Then, you can return to your mortgage lender and ask them for additional borrowing based on the new value.

Guru86

I wish I had 95% deposit I meant 5% for 95% mortgage.

Thanks for clearing things up much appreciated.