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Second mortgage in the middle of building work - valuation on house that's a building site?

(4 Posts)
gabbybaby Sun 15-Nov-15 09:22:10

Question about borrowing to complete building work. We extended our mortgage to finance an extension and loft conversion. We're in the middle of that initial 2 year fixed term. We always knew we didn't have enough to cover the whole job but now we've reached the point of having to come up with the rest of the money. We have no problem with credit/earnings, etc. Last time we borrowed the max we could which took us to 80% LTV. We could have borrowed more on basis of earnings and credit rating (and we've both been promoted since then so substantial earnings increase. That's not our problem). We need to come up with the additional to complete the job. I'm wondering how the valuation would work if we're currently on a building site?! The loft conversion is near enough complete so we've gone from a 3 bed, 1 bath, to 4 bed 2 bath house. But we currently have no kitchen and just one lounge (rather than huge open plan living that we'll have at the end). We're 2 months away from it all being completed (if we can't get the money we'll be maxing out credit cards and getting a personal loan to complete it). Once it's complete it will increase the value to well within a comfortable LTV, but right now, how would it be viewed by the valuer if we've gained a bedroom and bathroom, but don't have a kitchen and we're in a building site? We've paid a deposit on the kitchen which will be fitted early January. Will we be able to get a second mortgage in this state? Worried!

titchy Sun 15-Nov-15 16:22:12

You need to face the fact that you probably you wont get a mortgage until the work is finished sorry. We were in a similar position with a much better loan to value than you and our lender refused until the work was finished. Lenders now are far stricter than they were too. We ended up having to get a very expensive bridging loan for 4 months.

gabbybaby Sun 15-Nov-15 20:56:44

Thanks titchy. How long ago was it that you were in the same situation? When you say a bridging loan, do you basically mean a unsecured loan that you then paid off when you re-mortgaged?

titchy Sun 15-Nov-15 23:20:47

About 5 or 6 years ago. It was a second charge loan actually, but as I said we had a much better loan to value ratio (60% equity). An unsecured loan would have been plan c.

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