How do you fund a refurb?

P

pretzel

Guest
Hi,

I'm looking at buying a house that needs a complete renovation, rewire, plumbing, the works. I would have the money to pay the deposit and the stamp duty but if the bank will only give me 92% of the purchase price of the house how might I get the 100-200k needed to complete the refurb?

I've heard about self build mortgages who stagger payments as your building - is this option available for big refurbs does anyone know?

Thanks a mil for the help!
 
You tell the bank's valuer what you intend to do to the house. The valuer then gives a valuation based on the value of the house once the work is done. Then you will get 92% of THIS value.
 
pretzel said:
Thanks Vanilla - do all lenders do this do you know?
Click to expand...

All the normal banks do, or at least they used to. Nowadays all loan applications are under that bit more scrutiny so a mortgage broker would be able to give you more up to date advice.
 
Have to say that my experience last August (08) was that the bank (Halifax) would only accept the valuation pre refurbishment.

I was in the position of owning the house without a mortgage but I wanted to raise around 250k to undertake major building work....basically the house was to be completely gutted and an extension of 54 sq metres put on.

The valuation pre refurb was 480,000. When I got mortgage approval it was at the pertaining rate for LTVs of less than 75% but greater than 50%. I did my best to argue that spending 250,000 on the house would undoubtedly increase the valuation to over 500,000 and therefore I qualified for the rate relating to less than 50% LTV. There was no way they would agree to this under any circumstances.

I did take the mortgage from them in the end anyway as their rate was so competitive and I must have got one of the last trackers but it still rankles a little bit.

OP, I hope it works out for you, I really do, but sadly my experience was not the same as Vanilla's.
 
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