LTV Rates when switching and renovating

M

mickie smyth

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Hi folks,
We are about to start the process of switching, but we also want to take core of some renovations / extensions in the process.

Our outstanding mortgage is about 250,000 and we would be looking for approximately 100k for the works. A current ballpark estimate of the house valuation is 550,000 but I would need to get a valuation done to be exact on this. If my guesses are correct though, the LTV on this would be 63% or thereabouts and bring us over a number of LTV < 60% bands offered by the banks.

Has anyone ever heard of LTV bands being evaluated with respect to the estimated value post works if the extra cash is to put on an extension? We are planning on getting the kitchen extended a bit, which most valuers would really estimate would increase a house value.

I'm guessing the answer to this is no, but any tips around this would be great.

Mickie
 
Mickie

Interesting question.

Your options
1) Switch to another lender and borrow an extra €100k. But you will be on a high LTV until you have done the renovations.

Can you fix for one year or get a cheap variable rate from your new lender?

2) Borrow an extra €100k from the current lender. Do the renovations and then switch with the revised higher valuation and lower LTV.

For some reason, 2) seems like the simplest approach. Sort out one challenge at a time.

Brendan
 
Hi Mickie,

Yes Permanent TSB will work off the projected value on completion - I'm pretty sure other lenders will too(Finance Ireland will not).

The valuer will put down both the current value & the value on completion based on the proposed works - he/she will want to see a breakdown of what you intend on doing.

If you borrow 100Ke which would bring your mortgage up to 350Ke, then you should easily qualify for a <60% loan to value rate as the property value would need to just go up by 35Ke to 585Ke - 350Ke/585Ke x 100 = 59.8%.

Good luck!


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mickie smyth said:
Hi folks,
We are about to start the process of switching, but we also want to take core of some renovations / extensions in the process.

Our outstanding mortgage is about 250,000 and we would be looking for approximately 100k for the works. A current ballpark estimate of the house valuation is 550,000 but I would need to get a valuation done to be exact on this. If my guesses are correct though, the LTV on this would be 63% or thereabouts and bring us over a number of LTV < 60% bands offered by the banks.

Has anyone ever heard of LTV bands being evaluated with respect to the estimated value post works if the extra cash is to put on an extension? We are planning on getting the kitchen extended a bit, which most valuers would really estimate would increase a house value.

I'm guessing the answer to this is no, but any tips around this would be great.

Mickie
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