Mortgage and Home Improvements

workhorse

Hi

I currently own 50% of property. (shared ownership scheme)

We are looking to buy the other half but also want to take out extra for home improvements. (windows and doors, bathroom, kitchen and landscaping)

For example...
House Valuation - 150k
50% Mortgage left - 57k
Additional borrowing required - 25k

so I would need 157000 to purchase the second half and the improvements on a home currently valued at 150k

I am currently with Halifax.
How easy will this be?

Credit wouldn't be a problem.

Regards

dimbo61

No it will not be Easy.
100% + LTV not going to happen

Caz3121

As a guide I expect you will be looking at 90% LTV (£135k)
£75k for other half + £57k on original mortgage = £132k so you may be able to get £3k additional borrowing
If you can manage to get 95% LTV this would give you £10.5k additional borrowing but owing more than the property value is not going to happen

AnotherJoe

I would focus on owning the other half before making the improvements unless they are vital.

I dont know how they assess value when you wish to buy, but if someone comes round and takes a look at it and its condition, you could be in a Catch 22 situation, eg every £1 you spend on the house on improvements increases its value and you have to pay 50% of that value if you buy the 1/2 !

For example, lets say you spend £5k on new windows. If that adds £2k to the value of the house, then you've effectively spent £6k on windows (£5k plus 1/2 of £2k)

Better to buy the other half of the house worth say £2k overall less due to poor windows, then spend the £5k on windows, so it cost you £4k overall.

This assumes that buying the other 1/2 is your aim. If its not then make whatever improvements you want knowing you'll get back even less from them when you sell than you normally would.

workhorse

Thanks for your response.

Yes I plan to buy the other 50% now but was hoping to take out extra for improvements.

Looks like a personal loan.

AnotherJoe

Fair enough. I'd still buy the half you don't own first though ! Apart from the Catch 22 situation, if you take out a loan, thats more likely to impinge on your ability to increase your mortgage than the other way round.

workhorse

Indeed..

Thanks

dimbo61

If your property has gone up in value then you have more equity but the other 50% costs more !
Any chance major works are due shortly ?
If credit is not a problem then overpay your mortgage like it was £157,000 and not the £57,000 you have now.