Can I get a further advance on a new mortgage?

Banner95

Hello all,

I'm moving house and have found a property I like but needs some renovating. Do banks offer further advances on brand new mortgages? I'd probably need an additional 20k in addition to my mortgage. 

I have enough for a deposit of 10%-15% on the total value of the house + further advance of £20k.

Thanks  

[Deleted User]

You'd be better off reducing the deposit and getting a large mortgage.

If you don't have affordability for that, you won't be able to get a loan following the mortgage.

[Deleted User]

Im not sure what you are meaning by this.

A further advance is when you have a mortgage and you borrow more from your lender from the equity in your property.

Can you describe better what you wants to do?
Do you want to borrow for renovations based on an improved value of the property?

One way of doing this would be to take a 95% mortgage so you only have to out down 5% and you keep more of your deposit to do your renovations

Banner95

Deleted_User said:

Im not sure what you are meaning by this.

A further advance is when you have a mortgage and you borrow more from your lender from the equity in your property.

Can you describe better what you wants to do?
Do you want to borrow for renovations based on an improved value of the property?

One way of doing this would be to take a 95% mortgage so you only have to out down 5% and you keep more of your deposit to do your renovations

Basically the house price is £330k and I want an additional £20k to make improvements to the house. I can get a mortgage for £350k. So in theory I want to loan an additional £20k on top of the house value and for this £20k to be consolidated in the mortgage.

Hopefully this makes sense? 

Nile_E_Coyote

Banner95 said:

Deleted_User said:

Im not sure what you are meaning by this.

A further advance is when you have a mortgage and you borrow more from your lender from the equity in your property.

Can you describe better what you wants to do?
Do you want to borrow for renovations based on an improved value of the property?

One way of doing this would be to take a 95% mortgage so you only have to out down 5% and you keep more of your deposit to do your renovations

Basically the house price is £330k and I want an additional £20k to make improvements to the house. I can get a mortgage for £350k. So in theory I want to loan an additional £20k on top of the house value and for this £20k to be consolidated in the mortgage.

Hopefully this makes sense? 

Only way you can do it is out down smaller deposit and lend more. Equals the same thing really if you can get the extra mortgage loan amount.

[Deleted User]

Get a 95% mortgage now and save up or get a personal loan for the rest of the work.
You cant get a normal mortgage lender to give you more money than the house is worth.
You can get specialist renovation mortgages but rhey aren't going to work on your numbers 

AdrianC

Banner95 said:

Basically the house price is £330k and I want an additional £20k to make improvements to the house. I can get a mortgage for £350k. So in theory I want to loan an additional £20k on top of the house value and for this £20k to be consolidated in the mortgage.

Hopefully this makes sense? 

Stop thinking of this "advance" as somehow separate to the mortgage - you want it to be the mortgage...

So you have 10-15% equity. Let's call that £30k-£50k. That means that you need to borrow £300k-320k against a £330k property, in order to buy the property and do the £20k work. That would be 91%-97% LtV. You're pushing it - at the upper end of your equity range. At the lower end? Forget it. And that's before you consider fees, SDLT, etc.

Does the £20k work need to be done IMMEDIATELY?

teachfast

Nile_E_Coyote said:

Banner95 said:

Deleted_User said:

Im not sure what you are meaning by this.

A further advance is when you have a mortgage and you borrow more from your lender from the equity in your property.

Can you describe better what you wants to do?
Do you want to borrow for renovations based on an improved value of the property?

One way of doing this would be to take a 95% mortgage so you only have to out down 5% and you keep more of your deposit to do your renovations

Basically the house price is £330k and I want an additional £20k to make improvements to the house. I can get a mortgage for £350k. So in theory I want to loan an additional £20k on top of the house value and for this £20k to be consolidated in the mortgage.

Hopefully this makes sense? 

Only way you can do it is out down smaller deposit and lend more. Equals the same thing really if you can get the extra mortgage loan amount.

*Borrow more

saajan_12

Banner95 said:

Deleted_User said:

Im not sure what you are meaning by this.

A further advance is when you have a mortgage and you borrow more from your lender from the equity in your property.

Can you describe better what you wants to do?
Do you want to borrow for renovations based on an improved value of the property?

One way of doing this would be to take a 95% mortgage so you only have to out down 5% and you keep more of your deposit to do your renovations

Basically the house price is £330k and I want an additional £20k to make improvements to the house. I can get a mortgage for £350k. So in theory I want to loan an additional £20k on top of the house value and for this £20k to be consolidated in the mortgage.

Hopefully this makes sense? 

Basically mortgages are constrained by 2 things, and you'd need to satisfy BOTH to get an offer.
1) Affordability -> you say that's over 350k, so fine.

2) LTV -> Your 10-15% implies you're borrowing 85-90% of the value for purchase + 6% for the advance (20k/330k) = 91-96% mortgage. 
The 96% will be a no go. The lower end of that might get you a 95% LTV deal (with the higher rates that come with it). 

Whether the money is for the purchase price or for an advance, the reason you get lower rates (vs a personal loan) is that its secured. If you default, they can repossess your property, sell it and recover the mortgage balance from there. There would be associated costs for the repossession, plus the potential for the house to fall in value.. so they want a buffer ie won't lend you the full value of the security.. usually only upto 90% or recently 95%.