FTB - Buying a property that needs renovation

EFC5000

Hi Folks,

Quick question if anyone can help or offer advice is greatly appreciated.

I am in the process of viewing a house have had an offer accepted, I am a first time buyer. The property is not yet on the market, they need to sell quickly they can not afford to keep the property of renovate it, it was left to them in a will.

The current market value is in its current state is £80-£90,000, and £125-139,000 renovated.. I have had an offer of £59,000 accepted.

The mortgage company (halifax) has said I can have the funds with a 20% deposit. Total deposit is £12,000 but are not prepared to offer any lower in terms of the deposit amount %.

I can afford the deposit but that would leave me with no money to complete the basic renovation.

No my question is : At what stage could I release some equity in the property to help pay towards the renovations, as I am buying it nearly £25,000+/-5k below the current valuation, does that count as equity straight off? Is this even possible? Is there any other way of doing it except getting a loan to pay for the renovations.

Current background is single applicant with a wage of £48,000 Per year.

Any help is greatly appreciated.
Regards

eddddy

EFC5000 wrote: »

No my question is : At what stage could I release some equity in the property to help pay towards the renovations, as I am buying it nearly £25,000+/-5k below the current valuation, does that count as equity straight off?

Almost certainly not. The valuer would just look at what you paid for it, and value it at that.

Even after you've renovated it, the valuer may still base their valuation on what you paid for it. i.e. £59k

Bank valuers only tend to increase valuations in line with increases the local market.

Cakeguts

The value of a property is what someone is prepared to pay for it so if you pay 59k that is its value. The other numbers are just guesses and not relevant because no one has paid that much for it. The bank will value it at what you are paying for it.

You will have to find another way to pay for the renovations.

nodtomc

If you can't afford basic renovations after you've bought the house, don't buy the house.

moneyistooshorttomention

Is the house actually physically possible to live in as it stands right now? No dry rot, wet rot, woodworm, workable windows/roof/exterior doors/the electrics are at least safe?

If it is and bearing in mind you are on a high income - I'd go ahead and buy it anyway in your position. Looks like a darn good opportunity to me - and I don't believe in passing up good opportunities.

You can then figure out afterwards where the money is to come from for renovations - maybe a lodger? maybe a loan? maybe you're a generally capable sort of person and could "buy the books" and learn how to do some of it yourself?

I guess there might be an outside chance of someone like the Ecology Building Society lending you a suitable mortgage - because of the way you'd be helping to bring an old building up to modern-day standards and back into use. No harm in asking them...

bouicca21

Just what does "renovation" mean? New kitchen and bathroom, rewiring? Major structural works? Would the bank insist on a retention?

I'd have thought that a facelift was well affordable on a salary of £48k and such a small mortgage, but then I'm in London and used to the level of scrimping required to get a place.

And as Cakeguts says, if you are paying £59k, that's what it's worth.

gycraig_2

Why would someone on 48k a year need a further loan to do up a 60k house :S.

andrewmp

EFC5000 wrote: »

Hi Folks,

Quick question if anyone can help or offer advice is greatly appreciated.

I am in the process of viewing a house have had an offer accepted, I am a first time buyer. The property is not yet on the market, they need to sell quickly they can not afford to keep the property of renovate it, it was left to them in a will.

The current market value is in its current state is £80-£90,000, and £125-139,000 renovated.. I have had an offer of £59,000 accepted.

The mortgage company (halifax) has said I can have the funds with a 20% deposit. Total deposit is £12,000 but are not prepared to offer any lower in terms of the deposit amount %.

I can afford the deposit but that would leave me with no money to complete the basic renovation.

No my question is : At what stage could I release some equity in the property to help pay towards the renovations, as I am buying it nearly £25,000+/-5k below the current valuation, does that count as equity straight off? Is this even possible? Is there any other way of doing it except getting a loan to pay for the renovations.

Current background is single applicant with a wage of £48,000 Per year.

Any help is greatly appreciated.
Regards

If it was worth £80-£90k in it's current state, they wouldn't be selling it to you for £59k.

anto164

Why not drop the deposit to 10% (or even 5%?), take the greater sized mortgage, then use that 10% that was going to go to the deposit to start with the renovations? That's what we did and it worked well... Until we realised we needed a lot more money to do what we want :rotfl:

Sure, it'll cost more in the long term, but it saves having to somehow release equity.

But still, we managed to completely refurb 2 rooms so far, rewire the house, and also install a new combi in a different location to original with the money we took of the deposit (oh, and paid for our wedding).

[Edit: Ignore this post - You're not wanting to reduce deposit]

Mardle

If it's been empty for a while it's worth contacting the Empty Homes team at your local council. There may be loans available to bring empty properties back into use.

dimbo61

Complete rewire costs anything from £2500 to £4000 for normal 2/3 bed semi.
£4,000 for new central heating, £5,000 for double glazing all fitted by tradesmen qualified to do the work