If a house costs €180,000 and needs about €100,000 renovation costs, can I apply for a mortgage for €280,000? If so, how does it work? Do I submit detailed costing? Is it staged payments as each part of work is signed off?
Normally you would submit the application for a loan of 80/90% (whichever applicable) of the total cost of purchasing and renovating. You would definitely need costings and depending on whether any of it is structural you might need engineer or architect letter. Then the valuation of the finished house will have to be as much or more than the sum of the parts as such otherwise it would not be approved as the loan outstanding on the finished house cannot be more than whatever percentage the bank dictates of the finished house value.
It will be issued in stage payments, initially 80/90% of purchase price will be released to enable you complete the purchase then you need to start the renovations and when whatever agreed stages are reached you apply for a further drawdown on the mortgage. This can be a problem obviously as you may need money to complete each stage before the bank will allow the drawdown.
The final drawdown will not be issued until the project is finished, what stages and payments etc will depend on what is agreed with bank and probably engineer/architect that is signing off on each one.
It's doable but a bit more complicated than straight forward purchase, very common years ago, not so sure now how banks are viewing it so maybe shop around with lenders to see what terms they impose on these sort of deals.