Renovating old house - cash v's mortgage for house purchase?

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sadie

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We may have an opportunity to buy a run down property to renovate. If for example, the house price was €150k and the renovations cost €100k - is it wiser economically to buy the house with cash and then get a mortgage to cover the renovation cost. Or the other way around.

What would be the advantages - being a cash buyer I guess means the sale can go through faster- if that's a factor. Like in 6 weeks instead of 10/12 weeks.
And then you don't have to rent and pay a mortgage at the same time while you are renovating...
 
I don't think you'll get a mortgage to cover renovation costs if you buy the house for cash. At least, that's what NIB told me when we discussed it. Best check with your bank first before you make the decision. In any event, I'd sooner get the mortgage to buy the property and keep the cash in case something else changes.
 
Thanks, I will certainly check out with bank before making any moves.

I thought it'd be straight-forward enough to take out a mortgage on a property that doesn't already have one?
As long as the value of the mortgage is less than the market value of the house, is that not how it works?
 
It used to be straightforward, but NIB told me in no uncertain terms that, if I bought the house for cash, not to come back later looking for a mortgage on it. They (or another bank) may have a different view if you have specific renovations in mind and doing those is all part of the plan, but I'd still sooner have the cash, rather than spend it all and have no wiggle room with the renovations.
 

These days, with banks very fussy about who they lend to and how much, there is little point in assuming that any mortage application is straight forward, especially one for renovation, not purchase.
 
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