90% Mortgage Advice Needed

[bmg]

Hi all.
Any of you who had been following my previous thread will know we've been refused from the BOI.
So, currently the situation is my Partner and his Dad have been approved in principle for a 90% Mortgage.

I'm a little confused on exactly what we are getting here and excuse me please if this comes across as a long and dumb post:

They applied for €250000 which has been approved in principle
€230000 is the selling price and the additional €20000 for renovations.
The mortgage is a 90% mortgage, therefore to complete the purchase they've (we) got to source the other 10% elsewhere which is approx. €23000.

Now what I'm confused on is as follows:
The fact that the approval is there for the €250000 - is that the total amount the bank is giving or is it only 90% of the €250000

1. I had hoped it worked in a way that they give us the €20700 up front.
2. We borrow the 10% to finalise the purchase
3. We renovate the house - the Valuer says yes it' worth €250000
4. We then draw down the balance of the €250000 which is €43000

or do we only draw down the €20000 which was used to renovate the house and still have to go looking somewhere else to repay the €23000 (10%).

Basically we need to borrow the full €250000 or it won't work out for us

Can anyone shed any light on this for me please.

Thanks in advance.

 

[Molly]

Hi BMG,

If a mortgage lender has approved your partner and his father for 250,000 then they have agreed in principle to lend them a total of 250,000, but subject to this not being anymore than 90% of the value of the property upon completion of the proposed works.

The property will have to be valued at 278,000 on completion of the work.
ie, 90% of 278,000 = 250,000

the normal procedure is that you pay down the 10% deposit to buy the property ,in this case 23,000, the mortgage lender funds the balance for the purchase i.e. 207,000

by agreeing to a 90% mortgage , you may not at any time have available to you any more than 90% of the property value, so you will have to fund the improvements yourself , on completion of the work a valuer will then confirm the property is valued at 278,000 following the work and you can then drawdown the balance of the funds ie. 20,000.

 

[bmg]

, on completion of the work a valuer will then confirm the property is valued at 278,000 following the work and you can then drawdown the balance of the funds ie. 20,000.

Molly Thanks for your reply.

See your last sentence - drawdown the balance of the funds ie. 20,000
If they give upfront the €207000 + we combine the 10% deposit of 23000 we have the house bought. We then complete the renovations (out of our own pocket) are we then not entitled to draw down the balance of the €250000 which is actuall €43000

Their €207000
Our €23000 (which we must borrow)
= €230000
Leaves the €20000 to be drawn down

but

If they've approved the €250000 does that not mean we can still claim down the €23000 balance which we repay to the person who loans us the deposit?

 

[Molly]

apologies,

yes your right, once the property is confirmed valued at 278,000 or more, you may drawdown the full 90% ie 250,000, which is in fact a balance of 43,000

 

[bmg]

apologies,

yes your right, once the property is confirmed valued at 278,000 or more, you may drawdown the full 90% ie 250,000, which is in fact a balance of 43,000

Phew...

Thanks Molly.
You can probably sense that my main concern was the borrowing of the "10%" as we've got someone who will lend us this on the short term!
So I get it...they will give you 90% of what the house is valued at the end of completion of works yes?

Appreciate your replies.