Mortgage and works costs query

lf89

ACG 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. 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. 

So the house was already valued at the 387500, it's just after our own survey now we've found these issues and want to renegotiate. 

Would that then go back to our mortgage provider for them to revalue or?

jonnydeppiwish!

lf89 said:

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

As already said to you, the mould is almost certainly caused by the guttering failing and/or poor ventilation.  I mean the bed is against and external wall so not exactly unexpected.

There’s very little to repair in damp work in this - dehumidifier and move furniture away from the wall.

The roof has been worked on in recent years, the tiles are relatively new and will probably just require a day or two’s work to repair. £1-2k to make it good for  7-10 years.

Additionally, as previously mentioned, if you can’t afford to replace the roof as you want to, you can’t afford the property.

ACG

lf89 said:

ACG 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. 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. 

So the house was already valued at the 387500, it's just after our own survey now we've found these issues and want to renegotiate. 

Would that then go back to our mortgage provider for them to revalue or?

If it is your own survey that has picked up the issues, that makes life a bit easier. 
You can go back and renegotiate right up until exchange of contracts. The lender may ask why the price has come down, its up to you how much detail you go into about that. Some lenders may re-score your application if the numbers change, so its not a given that you will get the mortgage at the end of it with some lenders. Although the only time (once in 10 years) I have had a lender decline a change in everyones benefit I was able to appeal it so I would like to think you should be ok. 

lf89

ACG said:

lf89 said:

ACG 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. 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. 

So the house was already valued at the 387500, it's just after our own survey now we've found these issues and want to renegotiate. 

Would that then go back to our mortgage provider for them to revalue or?

If it is your own survey that has picked up the issues, that makes life a bit easier. 
You can go back and renegotiate right up until exchange of contracts. The lender may ask why the price has come down, its up to you how much detail you go into about that. Some lenders may re-score your application if the numbers change, so its not a given that you will get the mortgage at the end of it with some lenders. Although the only time (once in 10 years) I have had a lender decline a change in everyones benefit I was able to appeal it so I would like to think you should be ok. 

Really helpful to understand, thank you. Our aim, given what I've learned today, is to maintain the 10% deposit & 90% LTV so hoping it shouldn't change things too much.

Just wanting to get a bit more off as quote "it's a project house and we should be under no illusion that it isn't"...

ACG

I love a good doer upper. 
I've done 2 of them over the years. 

The second one, the valuation came back £2k lower than I agreed to buy for. I didnt bother renegotiating as it was a bargain and I intended to gut it so there was nothing in there I had not already accounted for. That house set me up! We are going back 5-10 years now and I made about £55k on it. Without that sort of profit, I would never be able to afford to live where I live now. But it was hard work, loads of fun, plenty of swearing and long days, a bout of the flu (sleeping in a house with no heating during winter was not the brightest idea in hindsight - it turns out I was not he-man) but loads of skills learnt and loads of jobs you realise you need a professional for. 

Hopefully you will enjoy it.