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a hypothetical question about mortgages

(7 Posts)
muddymary Sun 03-Apr-16 19:43:17

This is a semi-hypothetical question about a position we might be in in the future. I've made up the amounts just for easiness.

Can a bank loan you more than you need for your mortgage if it's still less than the value of the house?

So say we were going to buy a house that needs fixing up but has been valued at 200k but the owners were willing to sell it to us for £100k. Could we get a mortgage for £120k (so effectively 60% ltv) and use the remaining £20k for renovations etc?

eurochick Sun 03-Apr-16 19:52:42

Yes, if you pass the affordability tests for the loan.

noisytoys Sun 03-Apr-16 20:09:49

Yes. I recently got a mortgage to remortgage and consolidate debt.

babyconverse Sun 03-Apr-16 20:11:26

Yes absolutely - as long as the value of the asset is higher than the loan then you just need to demonstrate to the bank that you can maintain the loan (i.e. Pass affordability)

AllPowerfulLizardPerson Sun 03-Apr-16 20:13:21

Yes, but they will probably be very interested in why the vendors are selling at half price. And depending on the reason, may refuse to lend at all (eg a sale within a family, unless you can demonstrate the Revenue is OK with it and there is no deprivation of assets issues)

Bohemond Sun 03-Apr-16 20:18:51

Agree with Lizard.
You may find that they will only offer a proportion of the 'paid' price rather than the true value.

CotswoldStrife Sun 03-Apr-16 20:24:28

I'm going to sound a note of caution and say that when they send the valuer round I suspect they will say that it's worth the purchase price but not say that it's worth more so it would be hard to get a mortgage that is over 100 per cent of the sale price. I think you'd need to consult a broker for more information really.

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