Advice on fixer upper

Nathan1610

Hi everyone,
My partner and I are currently in the process of selling our home. We have seen a house we love but I just have a few queries, if anyone can provide any help it would be greatly appreciated. Between us we earn 50K and the house is listed for around £140K. In selling our current house will leave us with around 25K for a deposit so the getting the mortgage shouldn't be an issue I wouldn't have thought as we both have good credit ratings. My question is, the house does need a lot of work and we would be looking to building a double extension if possible. Is this something we could add onto the mortgage, if not what would be the best loan for us to look at to get the work done. Probably looking at borrowing another 40k if possible.
Any help that can be given is greatly appreciated.
Thanks, Nathan

HCIMbtw

You wont be able to cover an extension with a standard mortgage. 

Once you have a two storey extension built and signed off you would be able to remortgage the property with the two storey extension included. 

So worth bearing in mind as you could use this to pay off any loan you have taken out for the build (as mortgage interest rate will likely be a bit better than a loan interest rate). 

But you would want to time this for when any mortgage period comes to an end (e.g. it might be sensible to take a mortgage product for 2 years if you are planning the extension within that time scale.. rather than fixing for 10 years and never being able to realise the value of the extension against the mortgage). 

Regarding loans for the actual extension.. i've no idea sorry, would've thought just ordinary bank loans.. 

Doozergirl

A double extension on a house worth £140k isn't going to pay you back because it will cost a lot more than the value you can add.  £40k won't touch the sides of a renovation and extension.    

You'd be better off looking at bigger properties for both reasons of being able to borrow and to buy something that provides value for money.  

AdrianC

£25k equity on a £140k property is £115k borrowing, which is 82%+ LtV anyway.
Borrowing £155k against a £140k property is simply not going to happen.

FinallyStoppedLurking

Doozergirl said:

A double extension on a house worth £140k isn't going to pay you back because it will cost a lot more than the value you can add.  £40k won't touch the sides of a renovation and extension.    

You'd be better off looking at bigger properties for both reasons of being able to borrow and to buy something that provides value for money.  

Agree with this. 

Rambosmum

Another person agreeing with the above comments.
- It isn't worth the money you'll spend on it. 
- you'll struggle to get finances for it. 

In other circumstances you could get a home improvement loan, which is provided by your mortgage lender and the idea is that when you come to remortgage you would remortgage at the full amount- current mortgage plus home improvement loan. You can't get them above 85% LTV though. 

mlz1413

As Doozergirl said £40k will not get you a double height extension, did you get that figure from research or is that the money you are prepared to put into the house?

If it is a 'fixer upper' you need to think about renewing the electrics, central heating and probably the plumbing, as well as the cost of a new kitchen, bathroom, plastering in various rooms and carpets.  I'd think that would be a large chunk of your cash (approx £25k without seeing the property).

It maybe worth getting a local builder to go to the house with you, be prepared to pay for the builders time of an hour or two, to get their opinion of what needs doing and what the costs of you want doing will be.  It maybe the best few pounds you spend as it will give you a real insight into costs.

babyblade41

40k didn't even get me a single story ground floor extension when taking into consideration of architects  , structural engineers and fit out ... I would look elsewhere 

Bluebell1000

We bought a house in 2011 which needed modernisation (not full renovation). Including replacing the garage and bathroom, that cost about £15k with us doing most of the decorating ourselves. In 2014 we did a 2 storey extension building a new kitchen in place of a small conservatory, adding a toilet and utility downstairs, adding a large conservatory, refitting the existing kitchen area into a dining room, and adding double bedroom upstairs. That was a little under £50k. I know it's a few years ago, but I don't think your costs are way off, however it will depend on where you are in the country. I agree with the other posters though that you wouldn't be able to raise money against your mortgage to cover the costs in advance of the work, and you will need to make sure you have a contingency plan / budget should costs escalate.