How best to proceed/fund a doer upper

Bojangles28

I currently have my mortgage free home on the market.  I am interested in a property which is on the market at £15k more than mine and needs work.  I estimate I’d spend £40k to renovate.
If I sell mine, is it simply a case of getting a mortgage for the price difference plus the renovation costs I.e. £65k (basing this on current advertised prices)?  Not sure if it’s possible to get a mortgage with the majority going on home improvements?
if not, what are my options?

user1977

I think that should be fine, the purpose of the mortgage is really to buy the property (and you can keep your own cash for the works).

Assuming the renovation needs aren't so bad that they make the property unmortgageable, and your works aren't the sort of serious building works which a lender would need to know about.

eddddy

You need to look at this differently. Mortgages are based on "Loan to Value".

So if you buy a property for, say, £300k (and the mortgage valuer agrees it's worth £300k)...

• If you go for a 80% loan to value mortgage product, you could borrow up to £240k

• If you go for a 60% loan to value mortgage product, you could borrow up to £180k

• If you go for a 50% loan to value mortgage product, you could borrow up to £150k

But you say the property is a doer upper - it will need to be in 'good enough condition' to be mortgageable.

And the mortgage lender would want to check your finances, to make sure they think you can afford the repayments.

RHemmings

I don't understand what the problem is. You want to do work on the house that will cost money. You sell one house and buy another, and you choose the size of your deposit for the new house such that you have £40k left over in the bank. Provided a mortgage lender will lend you as much as you need, which from what you say doesn't seem to be a problem, then you don't have to use all your money to buy, and can use the left over £40k for whatever you want. Including home improvements. 

Bojangles28

Thank you all - that makes sense.  It is mostly cosmetic but would also want to convert the garage and add a partition wall so none of these should affect ability to mortgage it .  Just got to get mine sold quickly now 🤞

Albermarle

for the price difference plus the renovation costs I.e. £65k

Typically renovation costs usually go higher than initial estimate + agents/solicitor/moving fees + you might have to sell your house for less than you think. So £100K would seem more sensible.

Herzlos

You can always borrow much more (double your estimate at least) and overpay if you need to.

What you sell yours for isn't relevant to the new mortgage, just how much deposit you contribute and how much you can afford, so you could keep most of the cash from the sale to do the work and overpay the mortgage.