Mortgage with money to fix issues

vitaminz

So me and my fiancee are first time buyers and we've had a really nice house which has had an offer accepted of £175,000, with a £10 deposit. However this property is old/unoccupied and has some rising damp issues on the rear wall. I'm currently negotiating a possible discount on the price to fix the issues, and I've heard that it's possible to get a mortgage with a bit of extra paid in cash to fix any issues.

So for example if I had a price reduction of £5000, I'd be able to get a £175,000 mortgage with £170,000 being paid to the vendor and £5000 to me to undertake any remedial works. Is this actually something and something that most lenders wouldn't have an issues with?

Thrugelmir

Lender will only advance you the purchase price or the valuation which ever is the lower. If you intend undertaking works to the property you'll need the funds in hand.

ACG

You will probably find the opposite true.
If work needs to be carried out, the lender may hold a retention until the works are carried out.

Caz3121

vitaminz wrote: »

So me and my fiancee are first time buyers and we've had a really nice house which has had an offer accepted of £175,000, with a £10 deposit. However this property is old/unoccupied and has some rising damp issues on the rear wall. I'm currently negotiating a possible discount on the price to fix the issues, and I've heard that it's possible to get a mortgage with a bit of extra paid in cash to fix any issues.

So for example if I had a price reduction of £5000, I'd be able to get a £175,000 mortgage with £170,000 being paid to the vendor and £5000 to me to undertake any remedial works. Is this actually something and something that most lenders wouldn't have an issues with?

Can you confirm your numbers
If you were buying for £175k with a £10k deposit then the mortgage would be £165k and 94% LTV (assuming the valuation comes in as the same or more than your offer)
If the price was reduced to £170k then your mortgage would be based on the LTV of that figure - you would not be able to borrow £175k, more likely £161.5k would be the maximum so you would use £8.5k of your deposit to make it up to £170k purchase price and have £1.5k left towards work
this assumes that the £10k is for the house purchase only and you have separate funds for stamp duty, legal fees etc

csgohan4

vitaminz wrote: »

So me and my fiancee are first time buyers and we've had a really nice house which has had an offer accepted of £175,000, with a £10 deposit. However this property is old/unoccupied and has some rising damp issues on the rear wall. I'm currently negotiating a possible discount on the price to fix the issues, and I've heard that it's possible to get a mortgage with a bit of extra paid in cash to fix any issues.

So for example if I had a price reduction of £5000, I'd be able to get a £175,000 mortgage with £170,000 being paid to the vendor and £5000 to me to undertake any remedial works. Is this actually something and something that most lenders wouldn't have an issues with?

Who did you hear from? Larry down the Pub???


Are you pushing yourself over the limit? do you have enough as emergency funds? perhaps another option is to go for a cheaper house to leave some savings left over. Don't blow everything on something that needs a lot of work

vitaminz

Sorry, I meant 10% not £10k...d'oh. Heard from someone in work, clearly rubbish I guess!

ACG

It can be done but only in certain situations.
For example, if it is a Right to buy property or if I was buying a property from a relative who was selling you the property at a reduced price for whatever reason, but not in the scenario you describe.

angelpye

I have friends that got a 110% mortgage but this was years ago and when the house prices crashed they ended up in quite a bit of negative equity. Really shop around for damp work quotes - I had mine done for £4000 cheaper than the original quote I got, still all guaranteed etc. Luckily though I didn't find the cheaper quote until a few months after I moved in and the seller took the original quote value off the price. They had mine as one of many long term lets and didn't do much upkeep so I don't feel guilty as everything has had to be ripped back to the shell.

kingstreet

Put down 5% deposit and use the other 5% for the work you need to do.