House renovation and mortgage

[SayrraT]

My OH and I are first time buyers (in Scotland) and we have seen a house we like, the house has not been touched for at least 60 years and at a minimum needs re-wired, lathe and plaster ceilings replaced, walls re-done and new windows. It will also need a new bathroom and some work done in the kitchen as well as all the usual work.

The house is valued at £180,000 but for sale at £160,000 we have a mortgage in principal agreement for a huge amount more than this and a fairly decent deposit (£30,000 - 35,000 depending on how much we want to put down).

I am going to get a builder to look at the house to give us a quote to get the basic essential work done before we decide what we are going to do.

What I wondered was would we be able to get a mortgage for £180,000 if we bought the house for less, say £160,000 therefore giving us £20,000 to do the house up or will the bank only lend the purchase price minus deposit?

I'll speak to bank next week but wondered if anyone had any idea before I do.

I don't think you can get a mortgage for more than you pay for the house these days (you used to be able to in order to pay for extra work). I think you would struggle to get 100% mortgage so you will have to think about how you can bolster your savings to do the work.

That is what I kind of thought but wasn't sure.

Thanks

You could get a short-term mortgage, get some of the work done and then remortgage for a higher amount as the house should then be worth more giving you more money to play with. But the application fees may wipe out potential savings. Alternatively, some building societies used to (and I think still do but on a fairly limited basis) lend staged payments so the value of the final project would be taken into account and the next tranche of payment would be released when you had completed certain agreed works. A Scottish company called Build Store specialises in this sort of thing.

You can get mortgages specifically for renovation projects - prob not on the high street, try a broker.

Could you get a higher ltv and use some of your deposit for the work? Bank won't lend more than you pay.

Ok, thanks for the advice. I think the first thing we need to do is find out how much the essential work will cost and then take it from there. It might be too expensive, I have no idea how much things like this cost.

I'll look into Build Store as well lalalonglegs

We never intended on liking a house that needed work done as we've got no experience of anything like that but this one came along, it is in the right place and fulfills all of our essential and plenty of the desirable criteria on our list.

We have also seen another one which has been renovated, we are going to see both of them again next week.