FTB looking for Mortgage + Money for renovation

Phunky

My partner and I have stumbled on a great little house in Saltaire, West Yorkshire that we would love to buy but it would need renovating as it looks like its not been touched for 20years +

We are first time buyers and would like to know what are options would be for buying a place that would need to raise extra cash for renovating it.

The current price for the house is a bargain (in our eyes) and a matching house (same size, style etc) which has been renovated is currently up for sale for £51k more than the one we are looking at, so it looks like it could be a good investment as well.

We are going to go speak to some mortgage companies over the next couple of weeks but im unsure if there some special one we should be looking at to help raise the funds for being able to do up the house as well.

Dan_Collins_2

Well, you can no longer borrow more than 100% of the property value. So if you dont have a deposit you will have save for one, or if affordability allows a personal loan may help, but I would avoid that.

Phunky

I thought as much so it looks like getting as big a deposit as possible is our best option for now.

My Father has offered for us to use the equity in his house as part of the deposit but i don't quite understand how that works? Could this on top of say a 5% deposit by us be used to free up some funds?!

Markyt

Dan_Collins wrote: »

Well, you can no longer borrow more than 100% of the property value. So if you dont have a deposit you will have save for one, or if affordability allows a personal loan may help, but I would avoid that.

True, but you used to be able to borrow based on a projected valuation, i.e what it would be worth when brought up to the standards of similar nearby properties. I've not been involved in that area for a while, but it may still be possible to do it this way, albeit with a large retention and staged release as work is completed.

Phunky

Markyt wrote: »

True, but you used to be able to borrow based on a projected valuation, i.e what it would be worth when brought up to the standards of similar nearby properties. I've not been involved in that area for a while, but it may still be possible to do it this way, albeit with a large retention and staged release as work is completed.

That sounds like the kinda thing I was thinking off guess the best thing to do is to go and speak to someone face to face and see what all are options are, really dont want to miss this property though as it would be ideal for us - worst thing find the property before the mortgage

Dan_Collins_2

No, not in that way!

Conrad

You will not be able to borrow based on projected valaues.

Maybe something to consider is a penalty free mortgage now and then look to borrow more from same lender later or from a different lender however the absence of a penalty will of course mean a higher rate of interest.

I would'nt bank on prices going up for a while though, work or no work. Prices are still falling

Phunky

Conrad wrote: »

I would'nt bank on prices going up for a while though, work or no work. Prices are still falling

Very true, this is not a quick profit idea if we do manage to secure a mortgage we would be looking to stay in it for some time.

herbiesjp

Phunky wrote: »

I thought as much so it looks like getting as big a deposit as possible is our best option for now.

My Father has offered for us to use the equity in his house as part of the deposit but i don't quite understand how that works? Could this on top of say a 5% deposit by us be used to free up some funds?!

How much extra deposit is your father looking to give you?

How much money will you need for the work?

Could you put down a 10% deposit for the purchase, and the use any left over funds from your father for the redevelopment?

Markyt

Conrad wrote: »

You will not be able to borrow based on projected valaues.

I've just checked with our underwriters, and it is still allowed, but is assessed on a case by case basis. I'm not going to say which lender, as I don't want complaints about touting for business etc, but if we do it then other lenders will. Ask around.

Phunky

Well im not quite sure how it works with what my Father suggested, i dont think he will be looking at selling his house more putting it down as equity?

Like i say im not 100% sure on how his suggestion would work?

It needs fully redecorating and most likely a new Kitchen and Bathroom so it would be quite a bit - say £10-15k invested in it.