Switching mortgages and borrowing more

Sean1888

Registered User
Messages
21
Hi All,

What are the rules for switching and borrowing more to extend on a house?

Currently with UB for the mortgage (€167000 remaining)

House value is €240000

LTV <70%

UB have said they can do a top up but only to the value of 80% of house price. I am guessing this means we could only get a top up of about €17000.

Just wondering if we switch would a new lender allow us to borrow up to €70000 to fund a small extension and attic conversion?

Thanks
 

Fahrenheit

New Member
Messages
7
Hi Sean1888,

You may well have been approved for the funds you were seeking but in case you haven't here is some information that may prove useful.

If you were to spend say 50Ke on the property and lets assume the valuer puts down on report that the current value is 240Ke but the future value - on foot of the proposed works - would rise to 265Ke(i.e. a 50% uplift in value as a result of the works) then you'd be able to release up to date 80% of this value, i.e. 212Ke.

This would enable you to borrow c.40K/45Ke(212Ke minus 167Ke - don't forget there'd be switching costs too but some lenders will cover these) towards the extension. You'd have to fund the rest of the building works from your own sources if it is going to cost more.

It all comes down to what the valuer puts down as a the future value of the property on the report.

Alternatively, if 40/45Ke of mortgage funding isn't sufficient, then you'd need to get what's known as a loan to value exception.

Given you are an existing property owner the max you can get, as UB said, is 80% so you may need to switch to a lender that will grant you this exception.

What you have to be sure of in that instance is that the proposed lender will work off of the final/future valuation figure - Finance Ireland and ICS for example will only work off the current value, i.e. 240Ke which in your case which would mean you could release funds up to 216Ke(just 4Ke more than the first option I outlined).

So in order to release the absolute maximum you'd simply need to find a lender that will give you a loan to value exception based on the future value of the property so I'd be trying bank of Ireland, Permanent TSB, AIB and possibly EBS. KBC will also work off of the final valuation.

Hopefully this helps if you haven't already secured the funding you need!


Best of luck.


Justin Griffith

justin.griffith@mortgagebrokers.ie
 
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