Mortgage and works costs query

lf89

Hi there,

My partner and I just had our survey back and its worse than we were hoping. We anticipated already about £10k worth of works which we were fine with to update the property, but it needs a new roof and damp proofing throughout - costing an additional 20-25k we expect.

We don't have the cash for this, and from googling its hard to see if we were able to reduce the price with the vendor by 15-20k, would we still be able to borrow to the 'original' amount to cover the works? 

Appreciate any/all insight.

Thanks,
Liam

user1977

Maybe, it depends on the numbers you haven’t given us!

ACG

You cant borrow more on top of the mortgage to do works.
However you could put down a smaller deposit if the numbers allow. 

Lets say its a £200k property and you had a £50k deposit thats a 25% deposit. You could reduce the deposit so £20k (10%) and hold back the other £30k to do works... That assumes affordability and credit checks pass at the higher LTV. 

lf89

user1977 said:

Maybe, it depends on the numbers you haven’t given us!

How does it depend on the numbers?

lf89

ACG said:

You cant borrow more on top of the mortgage to do works.
However you could put down a smaller deposit if the numbers allow. 

Lets say its a £200k property and you had a £50k deposit thats a 25% deposit. You could reduce the deposit so £20k (10%) and hold back the other £30k to do works... That assumes affordability and credit checks pass at the higher LTV. 

We wouldn't be borrowing 'more' as our loan amount was already agreed, 348k on a 387k house, for a 10% deposit. From what I can tell, borrowing the same if the price reduces shifts the LTV, which can impact our rate etc. We don't have additional cash, thus why we're querying whether we can continue to borrow our 'agreed' amount, or whether that shifts with the renegotiated price. 

jonnydeppiwish!

Why does it need a roof and why does it need damp proofing?
How old is the house? What were the surveyors actual comments?

You will find a lot of backside covering in the survey and the work, although required at some point, may not need doing for quite a few years.

MWT

lf89 said:

ACG said:

You cant borrow more on top of the mortgage to do works.
However you could put down a smaller deposit if the numbers allow. 

Lets say its a £200k property and you had a £50k deposit thats a 25% deposit. You could reduce the deposit so £20k (10%) and hold back the other £30k to do works... That assumes affordability and credit checks pass at the higher LTV. 

We wouldn't be borrowing 'more' as our loan amount was already agreed, 348k on a 387k house, for a 10% deposit. From what I can tell, borrowing the same if the price reduces shifts the LTV, which can impact our rate etc.

The tricky bit is the 'etc'...

You have been approved for a 90% LTV mortgage. you have not yet been approved for 95% LTV...

bolwin1

Please ignore my comment below - I see you have already done this - great minds think alike...

You might be asking the wrong question. Surveys are usually very pessimistic / scary especially for first time buyers. Can I suggest that you post the relevant bits on the "In my home (includes DIY) MoneySaving" section of this forum & get some second opinions. The survey for my previous house said it needed a new roof and damp proofing. I replaced the roof 16 years later & didn't do anything re the damp-proofing & it was never an issue. 

ACG

lf89 said:

ACG said:

You cant borrow more on top of the mortgage to do works.
However you could put down a smaller deposit if the numbers allow. 

Lets say its a £200k property and you had a £50k deposit thats a 25% deposit. You could reduce the deposit so £20k (10%) and hold back the other £30k to do works... That assumes affordability and credit checks pass at the higher LTV. 

We wouldn't be borrowing 'more' as our loan amount was already agreed, 348k on a 387k house, for a 10% deposit. From what I can tell, borrowing the same if the price reduces shifts the LTV, which can impact our rate etc. We don't have additional cash, thus why we're querying whether we can continue to borrow our 'agreed' amount, or whether that shifts with the renegotiated price. 

Gotcha!

If you applied based on a purchase price of £387k but the valuer comes back at £350k 
Instead of putting down £38.7k deposit (10%) you could reduce your deposit to £35k. That should not cause any problems. 

However, you just need to check whether there are any retentions. As you could find on completion date you are not getting the full 90%, but 90% minus whatever the cost of works are. Its been a while since I have seen that happen though to be honest. 

lf89

jonnydeppiwish! said:

Why does it need a roof and why does it need damp proofing?
How old is the house? What were the surveyors actual comments?

You will find a lot of backside covering in the survey and the work, although required at some point, may not need doing for quite a few years.

The roof is 'at the end of its technical life' quote. Lots of photos in a different thread in DIY section. House is 1904, survey says some things should be done now but is a waste as need to repair whole thing sooner than later. The damp is evident everywhere, didn't need the expert to confirm it for us sadly...

We anticipate saving for 1-2 year's to do the work, but we want to get the money off now as it's inevitable due to the vendors poor care/maintenance. Essentially nothing has been done for 15y since they bought it

lf89

MWT said:

lf89 said:

ACG said:

You cant borrow more on top of the mortgage to do works.
However you could put down a smaller deposit if the numbers allow. 

Lets say its a £200k property and you had a £50k deposit thats a 25% deposit. You could reduce the deposit so £20k (10%) and hold back the other £30k to do works... That assumes affordability and credit checks pass at the higher LTV. 

We wouldn't be borrowing 'more' as our loan amount was already agreed, 348k on a 387k house, for a 10% deposit. From what I can tell, borrowing the same if the price reduces shifts the LTV, which can impact our rate etc.

The tricky bit is the 'etc'...

You have been approved for a 90% LTV mortgage. you have not yet been approved for 95% LTV...

Agreed, in likelihood we wouldn't want the 95% due to rates anyway. Just wanted to know whether it's even feasible.