Getting a mortgage for house that needs renovations

Discussion in 'Mortgages and buying and selling homes' started by texet, Aug 8, 2018.

  1. texet

    texet Registered User

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    31
    Hi,

    Just wondering is it hard to get a mortgage for a house that needs renovations, bank have approved us for a mortgage and said they would typically lend 80% of house price and 80% of renovations as we are not first time buyers.

    Looking for information on how this worked you for out for anyone or any advice gladly appreciated.
     
  2. Bronte

    Bronte Frequent Poster

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    Can you give us figures, and what renovations you propose to do and is the house liveable in meanwhile etc.
     
  3. RedOnion

    RedOnion Frequent Poster

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    1,553
    Hi,

    I haven't done this, but from talking to people who have.

    CBI rules are that at the time of purchase, they will need a valuation of what the house will be valued at after renovation, and that's the value the bank can lend against. So if you're doing structural works, you'll need an architect to draw up plans before you buy. The bank might require QS costs for proposed renovation.

    It's not too difficult to get the approval, or to get the initial mortgage to purchase the property.

    The funds for renovations will be drawn in stage payments in a similar way to a self build. The bank will likely insist you have an architect and a contractor to complete the work, and you'll need sign off at different stages to draw down the funds.

    I've heard it can be a little difficult to get sign off for the final stage payment unless everything has been completed perfectly, so it'd be an idea to hold back some of your own savings to handle that. You'll also need your own funds for furnishing and decorating - they won't lend you money for curtains / blinds for example.
     
  4. texet

    texet Registered User

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    31
    Thanks for the replies , very rough estimates house will be roughly 200k with a value of 350/400 when down. Renovations maybe 75/100.

    House was stripped completely so just a shell not too much plumbing/wiring but everything else is needed.

    Thanks RedOnion that’s a lot of information, was talking to bank and they’ve said once we provide all the paperwork required they will lend so fingers crossed.
     
  5. Tintagel

    Tintagel Frequent Poster

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    My understanding is that you will have to fund each stage yourself before the bank releases funds to you. This will involve having a valuation completed for each stage.
     
  6. Bronte

    Bronte Frequent Poster

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    Why is the plumbing and wiring not needed?

    You can be sure that it will cost the higher figure of 100K. I'd ask for 120K and try and spend a lower amount. Better to know you have the money than having to try and get it later. What has to be done and can you do a list of the items with figures
     
  7. cremeegg

    cremeegg Frequent Poster

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    Renovating a house does not usually increase its value by as much as the cost of renovation. Although this may not matter if you intend to live there long term, I suggest that you should be very definite of your figures before you commit yourself.