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Info needed on mortages and the like....please!

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This may end up being a moot point, but my partner and are looking at a house to buy, it's 165,000 but the home report says it has evidence of damp and wood boring infestation, anyway, I thought we co… Read More
gimmeabargain Avatar
7y, 2m agoPosted 7 years, 2 months ago
This may end up being a moot point, but my partner and are looking at a house to buy, it's 165,000 but the home report says it has evidence of damp and wood boring infestation, anyway, I thought we could put an offer in of 140,000 and use the extra cash to fix the problem.

My question is, can I get a mortgage for more than the price we pay for the house? i.e. get a mortgage for 165,000, only pay 140,000 and use the extra to resolve problems and maybe if we have any left over, put in gas central heating etc??

May be a moot point, as when we view we may not like it or the sellers may not accept 140, 000, but it's been on the market for nearly a year, so you never know your luck.

Oh and we'd be putting a 10% deposit down. If anyone can advise I would be very grateful!
gimmeabargain Avatar
7y, 2m agoPosted 7 years, 2 months ago
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#1
whats house actually valued at?
banned#2
dont think anyone is going to give you a 100% mortgage
#3
errr, wouldn't it be best to ask a mortgage advisor mortgage related questions? ;-)
#4
no, you cannot get a mortgage for more than the property is worth.
#5
I enquired about this with providers the other week when I was getting quotes and the answer was...no.

If you borrow more than the house is worth, and then don't repay, they can't claim the home, sell it and make their money back. Kind of.
#6
We're going to get a quote before we do anything anyway, work may be too much, house is valued at 170,000 in it's current condition, 200,000 once the wood boring etc is resolved.

It wouldn't be a 100% mortgage??? I'm putting down 10%?
#7
I also got the impression that they send out their own valuer for them to decide how much the proprty is worth, and therefore how much they'll lend you.
banned#8
gimmeabargain
We're going to get a quote before we do anything anyway, work may be too much, house is valued at 170,000 in it's current condition, 200,000 once the wood boring etc is resolved.

It wouldn't be a 100% mortgage??? I'm putting down 10%?


in todays climate i doubt very much you are going to get the mortgage you need and have the money needed, so dont waste money looking into it, if its free to get quotes and stuff then go ahead, nowt lost, but dont pay
#9
And was planning on asking a mortgage advisor, but wanted to have a general idea whether it was likely to be possible, before we get too excited about the house.
#10
Surely the house is valued at what it's worth, including the problems it has?

ie, it might actually be worth 180k, but it is valued at 165k because it has issues.
banned#11
from my experience, it is a condition of the mortgage that any extreme works are sorted by the seller before they lend.
banned#12
ChipSticks;8253564
Surely the house is valued at what it's worth, including the problems it has?

ie, it might actually be worth 180k, but it is valued at 165k because it has issues.

exactly. OP seems to think house will be worth £200K once problems sorted so price has already had the work costs taken into account

you cant just knock off this cost again :w00t:
#13
ChipSticks
Surely the house is valued at what it's worth, including the problems it has?

ie, it might actually be worth 180k, but it is valued at 165k because it has issues.


I don't understand what you mean? Yes it's valued at 170,000 and priced at 165,00 but it hasn;t sold in 10 months, so I'm thinking they might take a cheeky offer.
#14
You'd be better getting an interest free credit card and putting the repairs on that!
banned#15
sassie;8253480
dont think anyone is going to give you a 100% mortgage

or even 90% come to that. Might be one or two but interest rate will be high.
#16
I know I can get a 90% mortgage guys and I know my offer is cheeky, but none of you know what the market is like in my area or the house that I'm looking at for that matter.

All I want to knowis can I get a 165,000 mortgage when i only pay 140,000. That's it.....the consensus seems to be no, so that's it. Thanks for some informative advise!
[mod]#17
No. You cannot do that. Whatever you pay for the house is seen by the mortgage lender as the value of the property.
#18
csiman
or even 90% come to that. Might be one or two but interest rate will be high.


We have gone for a 90% LTV and trust me the only way we could get it was through a IFA, otherwise high street lenders wanted 15% minimum with money put aside for solicitor fees, surveys, etc.
#19
gimmeabargain
I don't understand what you mean? Yes it's valued at 170,000 and priced at 165,00 but it hasn;t sold in 10 months, so I'm thinking they might take a cheeky offer.


But the 170k value will have taken into account the fact it needs work, if it didn't need work it's value would be more like 185k. They have obviously reduced it to 165k to try and sell.

Oh, and offering 140k isn't cheeky, it's down right rude. lol
#20
they may be desperate to sell and may take his offer i dont think its cheeky at all the worse they can say is no.
its worth a try say get it for £140,000 spend £20,000 on it and then if its worth £200,000 you have got a straight £40,000 profit.
#21
ChipSticks
But the 170k value will have taken into account the fact it needs work, if it didn't need work it's value would be more like 185k. They have obviously reduced it to 165k to try and sell.

Oh, and offering 140k isn't cheeky, it's down right rude. lol


You don't know the bloomin market in my area and you don't know the house!!!!
#22
greyparrot
they may be desperate to sell and may take his offer i dont think its cheeky at all the worse they can say is no.


Thank-you, that's my logic! If it's been there for 10 months, they must be getting edgy, since plenty of other hosues are selling round here. And the price hasn't changed in that time.
#23
ChipSticks
But the 170k value will have taken into account the fact it needs work, if it didn't need work it's value would be more like 185k. They have obviously reduced it to 165k to try and sell.

Oh, and offering 140k isn't cheeky, it's down right rude. lol



If its been up for 10m and not sold whys it cheeky? its c 15% of the asking price

The fact is that half the houses up for sale were on for the same price 2 years ago and they did'nt sell then. Seller need to be realistic if they intend to sell
[mod]#24
ChipSticks
But the 170k value will have taken into account the fact it needs work, if it didn't need work it's value would be more like 185k. They have obviously reduced it to 165k to try and sell.

Oh, and offering 140k isn't cheeky, it's down right rude. lol


...it isnt rude. Far from it. You have to have a starting point and if you want to go in at £140k it will be up to the seller to refuse it.
#25
gimmeabargain
You don't know the bloomin market in my area and you don't know the house!!!!


Did you see the "lol" on the end of my comment, it means laugh out loud, or lots of laughs, it basically means a comment is meant in a light hearted or funny way.

now chill out.
banned#26
There is a way to do this.

If you are comfortable enough to raise this with the seller, have a chat about this:

Basically, you buy the property for above the asking price (sounds mad but bare with me!).
In essence, they are paying your deposit, and you use your deposit that you saved up for renovations.

Here's an example:

You see a house for £100k and you have £10k deposit.
Instead of paying £100k, you agree to pay the seller £110k and they pay the deposit direct to your mortgage provider (or to you and then you pass it on).
You then take a mortgage for £100k with the £10k deposit paid and you have £10k (of your original deposit) left to do up the property.

Substitute the figures for what you are talking about and you'll come up with a solution.
The only down side is that the seller has to have the deposit money liquid before a transaction takes place so it is all down to how much they have in the bank. And also, you can't over inflate a house price so 15/20% should be the ceiling value.

Hope that helps?

P.S. First Direct have great mortgage deals at the moment! Look at a variable of no more that 2% over base.
banned#27
whatsThePoint
My wife used to work in morgages, it was called illegal then not sure if laws have changed in last 2 years


My estate agent recommended this to me.
In essence there isn't anything illegal in it if you think about it. As long as a deposit is paid, what does it matter where the money comes from?
And as long as house is worth the additional on the mortgage, it seems fine to me.
banned#28
JonnyTwoToes
My estate agent recommended this to me.
In essence there isn't anything illegal in it if you think about it. As long as a deposit is paid, what does it matter where the money comes from?
And as long as house is worth the additional on the mortgage, it seems fine to me.


as the house is in need of work i hardly think anyone is going to value it at £17.000 more, let alone the real figure probably needed
banned#29
sassie
as the house is in need of work i hardly think anyone is going to value it at £17.000 more, let alone the real figure probably needed


Just an idea, don't shoot the messenger.
banned#30
JonnyTwoToes
Just an idea, don't shoot the messenger.


ooops sorry, didnt mean to come across abrupt :oops:
banned#31
whatsThePoint;8253654
If its worth £200k and priced at £170k needing £30k worth of repairs
whats the point of buying it, might as well get a sound house to start with


whatsThePoint;8253771
I paid £60k for my flat that started off with a price of £92k because it needed work
Same flat next door was on market at same time for £150k

Hypocrisy! :w00t: :-D
#32
JonnyTwoToes
My estate agent recommended this to me.
In essence there isn't anything illegal in it if you think about it. As long as a deposit is paid, what does it matter where the money comes from?
And as long as house is worth the additional on the mortgage, it seems fine to me.


You're not taking a personal loan on this. It's a mortgage which is dependant on a valuation.

Of course the estate agent will tell you this - it's in his interest to try anything to get a sale and his 2.5% cut. Estate agents are a pain in the a**e for giving stupid advice to potential buyers.

Having worked as a financial advisor for over 20 years, I met plenty of potential buyers that were fed crap by estate agents desperate to get their slimy hands on a big fat commision for doing next to nothing.

Its harder than ever to get a mortgage and trying to hoodwink the lender will only cost you in the long run. Lying on application forms about purchase price is ILLEGAL - you could end up with a criminal record and no chance of getting a mortage with anyone at all.

Depending on how long the repairs take, it might be worth looking at using credit cards to pay for the work. Try to avoid drawing too much cash as there is a further fee on this. See if the builder will let you pay for materials on your card rather than giving him cash. Or use credit card cheques. As you fill up each card start switching to 0% cards and paying the 3% fee. Its worth getting these switching cards in place first and making sure you have more credit limit than you think you'll need. Once the work is done you remortgage and pay the cards off - make sure you are eligible for the further advance and your salary(ies) are sufficient to allow this extra lending.

This is only suitable for short term work as it can work out very expensive once the 0% expires and the monthly repayments will be quite high compared to the amount you'll pay on a mortgage for the same amount.

Go and see a reputable mortgage advisor - beware of no upfront fee deals - the fees are added to your mortgage effectively reducing your deposit from say, £10,000 to £8,000.
Be careful of the man in the pub who used a great advisor who got him a fantastic deal - most of these people have no idea what they've signed up for and wrongly believe that they've got the best deal in the world!

Financial/mortgage advisors are generally only interested in getting your signature and will only offer the best deals to people who know what they're looking at and how much it's going to cost. The better the deal the lower the commision. ;-)
banned#33
davek
You're not taking a personal loan on this. It's a mortgage which is dependant on a valuation.

Of course the estate agent will tell you this - it's in his interest to try anything to get a sale and his 2.5% cut. Estate agents are a pain in the a**e for giving stupid advice to potential buyers.

Having worked as a financial advisor for over 20 years, I met plenty of potential buyers that were fed crap by estate agents desperate to get their slimy hands on a big fat commision for doing next to nothing.

Its harder than ever to get a mortgage and trying to hoodwink the lender will only cost you in the long run. Lying on application forms about purchase price is ILLEGAL - you could end up with a criminal record and no chance of getting a mortage with anyone at all.

Depending on how long the repairs take, it might be worth looking at using credit cards to pay for the work. Try to avoid drawing too much cash as there is a further fee on this. See if the builder will let you pay for materials on your card rather than giving him cash. Or use credit card cheques. As you fill up each card start switching to 0% cards and paying the 3% fee. Its worth getting these switching cards in place first and making sure you have more credit limit than you think you'll need. Once the work is done you remortgage and pay the cards off - make sure you are eligible for the further advance and your salary(ies) are sufficient to allow this extra lending.

This is only suitable for short term work as it can work out very expensive once the 0% expires and the monthly repayments will be quite high compared to the amount you'll pay on a mortgage for the same amount.

Go and see a reputable mortgage advisor - beware of no upfront fee deals - the fees are added to your mortgage effectively reducing your deposit from say, £10,000 to £8,000.
Be careful of the man in the pub who used a great advisor who got him a fantastic deal - most of these people have no idea what they've signed up for and wrongly believe that they've got the best deal in the world!

Financial/mortgage advisors are generally only interested in getting your signature and will only offer the best deals to people who know what they're looking at and how much it's going to cost. The better the deal the lower the commision. ;-)


Sorry, a misunderstanding here - I'm not personally looking for a deal, the OP is.
The estate agent is a 'friend' who recommended this idea when the seller is in a rush to sell and the buyer hasn't got a deposit.
I think as long as the price paid is within the valuation range, there shouldn't be a problem.
Everyone's a winner! Even Michael!
#34
gimmeabargain
And was planning on asking a mortgage advisor, but wanted to have a general idea whether it was likely to be possible, before we get too excited about the house.



I worked for a mortgage company before I left to have my kids, and our company wouldn't lend based on the potential future value of a property. When they instruct a valuation of the property, they would only lend up to a certain amount of the property value in it's current state (the amount of deposit they wanted you to put down depended on the total mortgage value and rate offered ). If it needs work doing, it's up to you to either try and knock the seller down enough to cover this, which may be hard as the property should have been placed on the market at the right price for it's current state, or you're going to have to fund the cost of the work yourself somehow.
#35
davek


Depending on how long the repairs take, it might be worth looking at using credit cards to pay for the work. Try to avoid drawing too much cash as there is a further fee on this. See if the builder will let you pay for materials on your card rather than giving him cash. Or use credit card cheques. As you fill up each card start switching to 0% cards and paying the 3% fee. Its worth getting these switching cards in place first and making sure you have more credit limit than you think you'll need. Once the work is done you remortgage and pay the cards off - make sure you are eligible for the further advance and your salary(ies) are sufficient to allow this extra lending.



You need to check with your lender about borrowing more against your mortgage. Even if your salary can support the extra money you'e after, and there's now enough equity in the house after the work to keep the loan to value at an acceptable level, if you're a new customer there may well be a time limit before you can ask them for further money. With out new customes, they couldn't apply for further borrowing until they had been a customer for at least 12 months and their mortgage account hadn't had any payment issues. Just something to bear in mind as it could financially mess you up if you take out credit cards, plan to pay them off with more money then find you're not allowed to borrow more against your mortgage until a certain amount of time has lapsed.
#36
JonnyTwoToes
Sorry, a misunderstanding here - I'm not personally looking for a deal, the OP is.
The estate agent is a 'friend' who recommended this idea when the seller is in a rush to sell and the buyer hasn't got a deposit.
I think as long as the price paid is within the valuation range, there shouldn't be a problem.
Everyone's a winner! Even Michael!


I know It's the OP looking for a mortgage, I was just quoting your advice :thumbsup:

If the buyer hasn't got a deposit they need a 100% mortgage. Rocking horse poop springs to mind when discussing 100% mortgages.

If he's suggesting that you deliberately mislead a lender in writing on a signed application form about how much you are paying then he's no friend!

A lender will have the house valued and offer you a loan based on their valuation, not yours or the vendors. The only way around this is if the vendor says they will pay your deposit based on the lenders valuation.

If the property is valued at 100k, the lenders will lend up to 95k on it (usually). The vendor says they will pay the buyers 5% deposit. Although the vendor doesn't actually pay the 5k out, he only gets 95k paid to him on a property that he should have got 100k for - so he's 5k out of pocket which was effectively the buyers deposit.

The OP needs to get a valuation on the property as it stands now with work needing to be carried out.

Lets say the property is worth £160k in its present state. A lender will give you a £144k loan using a 90% mortgage. Which leaves the buyer having to find £16k as deposit.
In this case the buyer makes an offer of £160k on the condition that the seller pays the 10% deposit. So the seller is going to get £144k paid into his account. The buyer tells his estate agent what's happening and gets them to amend their commision accordingly.

This is a more acceptable way of getting around the problem. The OP keeps his deposit and only has to find £4,000 for the estimated £20k work that needs doing - assuming that it doesn't go over budget :whistling: Use the credit cards as I said earlier but make sure you can borrow the amount you'll need to pay everyting off!

From what you've said about the house being on the market for so long and the fact that many people can't get a mortgage for love nor money, you're the one in the driving seat.
Please PM with housewarming invite :-D
#37
Charlie&Lola
You need to check with your lender about borrowing more against your mortgage. Even if your salary can support the extra money you'e after, and there's now enough equity in the house after the work to keep the loan to value at an acceptable level, if you're a new customer there may well be a time limit before you can ask them for further money. With out new customes, they couldn't apply for further borrowing until they had been a customer for at least 12 months and their mortgage account hadn't had any payment issues. Just something to bear in mind as it could financially mess you up if you take out credit cards, plan to pay them off with more money then find you're not allowed to borrow more against your mortgage until a certain amount of time has lapsed.


Thats what I said - 'make sure you're eligible for the further advance' :thumbsup:

What appears to the buyer to be a great project which is achievable and affordable often doesn't to the lender and when computer says 'no' it means NO!
#38
whatsThePoint
How is it Hypocrisy
I won't need to spend £90k on my flat to make it worth £150k

But i'll do it in letters to help you understand

£200K House for sell at £170K needing £30K worth of work possible more once you start= £200k house at a cost of £200k+

£150k Flat bought at £60k needing £20k worth of work = £150k Flat bought for £80k

Its a big ask but do you see the difference :whistling:


Thats how to do it!!

Another Kristian Digby in the making? ;-)
banned#39
whatsThePoint;8254555
How is it Hypocrisy
I won't need to spend £90k on my flat to make it worth £150k

But i'll do it in letters to help you understand

£200K House for sell at £170K needing £30K worth of work possible more once you start= £200k house at a cost of £200k+

£150k Flat bought at £60k needing £20k worth of work = £150k Flat bought for £80k

Its a big ask but do you see the difference :whistling:

put your specs on and try and find where the OP states 30K of work needs doing :whistling:

Its a big ask but do you see the what a plank you just made yourself look :whistling::roll:

OP is doing exactly what you did and then you berate him for it.

FOOL! :whistling:
#40
the majority of mortgage lenders at the mo will only lend 90% max so when you add the 90% mortgage to your 10% deposit you have the full 100% off the house price needed to buy it.

the value of £165k is what the estate agent is trying to get, your mortgage company wont pay any attention to this figure. once you put in your offer of say £140k and it is accepted the mortgage company will get their surveyors to do a valuation on the property (will cost you anything from aby £200 upwards on a house of that value). this survey will tell you the actual valu eof the house and usually the rebuild cost too. but unless you pay for a homebuyers or full structural survey the value is about all it will tell you.

the mortgage company then get the valuation back from their guys and that will be the figure they base your mortage on, so if it comes back at worth £165k they will lend you £148500 and you have to find the 10% difference as your deposit. a mortgage company will not now lend over their valuation as say if they lent you £200k on the house and you defaulted on your payments they would take the house & sell it off to cover their debts but if the house isnt worth £299k they are out of pocket.

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