How does renegotiating house price raise funds for work needed?

desgirl14

Hello!
I’m a first time buyer and had and offer accepted on a great house, searches have all been done but the homebuyers survey has highlighted a couple of structural issues that I would really like resolved before moving in.
I am in the process of getting some quotes done and would like to negotiate the price down with the seller, but, and this may be a really stupid question, I don’t understand how this can actually help me afford to do the work which is how it reads on most of the articles I’ve read. Please can someone give me a little more insight if possible?

For example:
Original house purchase price could be £200,000 and a 10% deposit of £20,000, but let’s say I need £10,000 of work done, by reducing the house price to £190,000 I’ve only saved myself £1,000 to go towards the work on the house if I then have a £19,000 deposit.

I think I can afford the work that needs doing if I don’t do all of the cosmetic changes I wanted to do on purchase but I’m wondering if I’m missing some benefit of renegotiating the house price? Any help understanding would be much appreciated! 

k12479

desgirl14 said:

Original house purchase price could be £200,000 and a 10% deposit of £20,000, but let’s say I need £10,000 of work done, by reducing the house price to £190,000 I’ve only saved myself £1,000 to go towards the work on the house if I then have a £19,000 deposit. 

You're putting in £1,000 less cash, but will also need to borrow £9,000 less.

In your example the smaller mortgage will mean smaller repayments leaving more disposable income each month to save up towards repairs (or more money left over to repay a loan/credit cards/etc. for repairs)

desgirl14

k12479 said:

desgirl14 said:

Original house purchase price could be £200,000 and a 10% deposit of £20,000, but let’s say I need £10,000 of work done, by reducing the house price to £190,000 I’ve only saved myself £1,000 to go towards the work on the house if I then have a £19,000 deposit. 

You're putting in £1,000 less cash, but will also need to borrow £9,000 less.

In your example the smaller mortgage will mean smaller repayments leaving more disposable income each month to save up towards repairs (or more money left over to repay a loan/credit cards/etc. for repairs)

Thank you. I realised the benefit of borrowing less which is of course great but didn’t think about that meaning the repayments are of course smaller!

dimbo61

Your a FTB and unless you buy a property which needs nothing doing to it you will have to save to do any work once your in the property !

comeandgo

If you are looking at a further loan to do any repair work do not start the process of finding the loan until after the property is completed as further loans can hamper the amount you can borrow as a mortgage.

Alter_ego

Re negotiating is simply resetting the price to what the house is worth in the condition it is in. How you go about repairs is your problem if you buy.

ka7e

Alter_ego said:

Re negotiating is simply resetting the price to what the house is worth in the condition it is in. How you go about repairs is your problem if you buy.

I live in an area of high demand/low supply and it's not going to change in the foreseeable future (huge construction projects nearby). The idea of a "bad" survey having any leverage on price in no longer applicable. Surveyors have to cover themselves against litigation so produce worst-case-scenario reports that scare FTBs, but are usually taken with a pinch of salt by those who have bought before. If you see the words "Scope for improvement" or "Some modernisation needed" in the details, the pricing already reflects that. Here, if you try and renegotiate, you are told there are probably 5 potential buyers waiting in the wings willing to pay full market price and then the property will be re-marketed at £5-10k more than you offered!

Cactus_Flowers

Would it be possible to only put in 5% deposit? That would leave you with over £10k cash left over to start the work. I think there's a Gov scheme to help with 5% mortgages at the moment, if there are no banks giving them out them.

desgirl14

Cactus_Flowers said:

Would it be possible to only put in 5% deposit? That would leave you with over £10k cash left over to start the work. I think there's a Gov scheme to help with 5% mortgages at the moment, if there are no banks giving them out them.

I’m not really comfortable with going for a 5% deposit and I am now far enough along in the process that my mortgage has been applied for and agreed. Thanks for the idea though. 
I think I can find the money it just means I don’t get to update the kitchen yet which I really wanted to do.

I was just struggling as everything I read about responding to a bad survey  suggested renegotiating the price to pay for the work that needed doing but I couldn’t see how this actually helps you pay for the work straight away - turns out it doesn’t! 😅

TheJP

desgirl14 said:

Cactus_Flowers said:

Would it be possible to only put in 5% deposit? That would leave you with over £10k cash left over to start the work. I think there's a Gov scheme to help with 5% mortgages at the moment, if there are no banks giving them out them.

I’m not really comfortable with going for a 5% deposit and I am now far enough along in the process that my mortgage has been applied for and agreed. Thanks for the idea though. 
I think I can find the money it just means I don’t get to update the kitchen yet which I really wanted to do.

I was just struggling as everything I read about responding to a bad survey  suggested renegotiating the price to pay for the work that needed doing but I couldn’t see how this actually helps you pay for the work straight away - turns out it doesn’t! 😅

You'll have to notify your lender if you renegotiate due to the reduction which could result in a change of LTV/mortgage offer. In this case you'll have to find the capital, the reduction benefits you in the long term i.e. when you sell as you'll likely make the costs back then.

JReacher1

You can agree with the seller to give you some money after completion to cover your repair costs. So your mortgage stays the same amount but they give you say £5k back after completion. Not standard but I know people who have done this.