Financing home renovations?
Discussion
Hi Folks,
Currently in the process of buying a new place which needs a bit of work to turn it into our perfect home. We intend to take a mortgage to purchase but use savings to start some of the renovation. We intend to add footprint (SPP) via a couple of extensions and remodel bathrooms and kitchen. We expect we can complete most of the building work on savings but we won't be able to finish.
My question is what level of 'completeness' does the renovation work need to be before we can have it revalued and remortgage the house to complete it? Ideally we would use a lower deposit to secure the home and raise capital that way, however this would push us into a higher LTV and change the mortgage rates. We are expecting the renovation to cost £250k (we can use about £100k of savings) and maybe add the same value to the house (we are not doing it to add value but to make it more liveable for us). My concerns is that the house would be valued less that it is today while renovations are underway, but I am not sure if the lenders look at the completed value rather than shell value.
Any advice welcome
JD
Currently in the process of buying a new place which needs a bit of work to turn it into our perfect home. We intend to take a mortgage to purchase but use savings to start some of the renovation. We intend to add footprint (SPP) via a couple of extensions and remodel bathrooms and kitchen. We expect we can complete most of the building work on savings but we won't be able to finish.
My question is what level of 'completeness' does the renovation work need to be before we can have it revalued and remortgage the house to complete it? Ideally we would use a lower deposit to secure the home and raise capital that way, however this would push us into a higher LTV and change the mortgage rates. We are expecting the renovation to cost £250k (we can use about £100k of savings) and maybe add the same value to the house (we are not doing it to add value but to make it more liveable for us). My concerns is that the house would be valued less that it is today while renovations are underway, but I am not sure if the lenders look at the completed value rather than shell value.
Any advice welcome
JD
jdwoodbury said:
Hi Folks,
Currently in the process of buying a new place which needs a bit of work to turn it into our perfect home. We intend to take a mortgage to purchase but use savings to start some of the renovation. We intend to add footprint (SPP) via a couple of extensions and remodel bathrooms and kitchen. We expect we can complete most of the building work on savings but we won't be able to finish.
My question is what level of 'completeness' does the renovation work need to be before we can have it revalued and remortgage the house to complete it? Ideally we would use a lower deposit to secure the home and raise capital that way, however this would push us into a higher LTV and change the mortgage rates. We are expecting the renovation to cost £250k (we can use about £100k of savings) and maybe add the same value to the house (we are not doing it to add value but to make it more liveable for us). My concerns is that the house would be valued less that it is today while renovations are underway, but I am not sure if the lenders look at the completed value rather than shell value.
Any advice welcome
JD
Most lenders will be reluctant to value the property whilst the property is a shell, you would only see a benefit once the works were fully completed......Currently in the process of buying a new place which needs a bit of work to turn it into our perfect home. We intend to take a mortgage to purchase but use savings to start some of the renovation. We intend to add footprint (SPP) via a couple of extensions and remodel bathrooms and kitchen. We expect we can complete most of the building work on savings but we won't be able to finish.
My question is what level of 'completeness' does the renovation work need to be before we can have it revalued and remortgage the house to complete it? Ideally we would use a lower deposit to secure the home and raise capital that way, however this would push us into a higher LTV and change the mortgage rates. We are expecting the renovation to cost £250k (we can use about £100k of savings) and maybe add the same value to the house (we are not doing it to add value but to make it more liveable for us). My concerns is that the house would be valued less that it is today while renovations are underway, but I am not sure if the lenders look at the completed value rather than shell value.
Any advice welcome
JD
jdwoodbury said:
I was under the impression that there were products on the market to support renovations, I was looking to see if anyone had experience of using them. Having watched all this 'Grand Design' programs they always appear to re-finance during the build process so it must be possible.
Not standard mortgage products......................you would need development finance......jdwoodbury said:
Hi Folks,
Currently in the process of buying a new place which needs a bit of work to turn it into our perfect home. We intend to take a mortgage to purchase but use savings to start some of the renovation. We intend to add footprint (SPP) via a couple of extensions and remodel bathrooms and kitchen. We expect we can complete most of the building work on savings but we won't be able to finish.
My question is what level of 'completeness' does the renovation work need to be before we can have it revalued and remortgage the house to complete it? Ideally we would use a lower deposit to secure the home and raise capital that way, however this would push us into a higher LTV and change the mortgage rates. We are expecting the renovation to cost £250k (we can use about £100k of savings) and maybe add the same value to the house (we are not doing it to add value but to make it more liveable for us). My concerns is that the house would be valued less that it is today while renovations are underway, but I am not sure if the lenders look at the completed value rather than shell value.
Any advice welcome
JD
Personally I would split the project down and prioritise what you can afford to add the most value first. You mention extensions plural, so for example you could fully complete one of those first, do the kitchen / bathrooms then get the house revalued to finance the 2nd extension / the rest.Currently in the process of buying a new place which needs a bit of work to turn it into our perfect home. We intend to take a mortgage to purchase but use savings to start some of the renovation. We intend to add footprint (SPP) via a couple of extensions and remodel bathrooms and kitchen. We expect we can complete most of the building work on savings but we won't be able to finish.
My question is what level of 'completeness' does the renovation work need to be before we can have it revalued and remortgage the house to complete it? Ideally we would use a lower deposit to secure the home and raise capital that way, however this would push us into a higher LTV and change the mortgage rates. We are expecting the renovation to cost £250k (we can use about £100k of savings) and maybe add the same value to the house (we are not doing it to add value but to make it more liveable for us). My concerns is that the house would be valued less that it is today while renovations are underway, but I am not sure if the lenders look at the completed value rather than shell value.
Any advice welcome
JD
Can you borrow enough to fund the purchase plus enough to build and finish? If so, you could take a product with no ERC, which, combined with the high LTV would obviously be at a high %, but when the works are complete you could re-mortgage without penalty, at a more favourable LTV and secure a better long-term rate.
Without figures I couldn’t tell whether you’d rather not do the above, or it’s an impossibility.
Without figures I couldn’t tell whether you’d rather not do the above, or it’s an impossibility.
Claude455 said:
Can you borrow enough to fund the purchase plus enough to build and finish? If so, you could take a product with no ERC, which, combined with the high LTV would obviously be at a high %, but when the works are complete you could re-mortgage without penalty, at a more favourable LTV and secure a better long-term rate.
Without figures I couldn’t tell whether you’d rather not do the above, or it’s an impossibility.
Yes I was thinking a tracker with no ERC would be a possible route, I was hoping to keep LTV under 75% to get the better rates but moving to a higher rate (I think it would be about 2%) may work out cheaper than short term finance. My concern was that the building work is still going to be a year away at least, after agreeing the plans with an architect and gaining planning permission. I didn't fancy holding onto that cash and paying a higher rate while waiting for that to happen. Without figures I couldn’t tell whether you’d rather not do the above, or it’s an impossibility.
jdwoodbury said:
My concern was that the building work is still going to be a year away at least, after agreeing the plans with an architect and gaining planning permission. I didn't fancy holding onto that cash and paying a higher rate while waiting for that to happen.
Have you got builders quotes yet? Our builders are suppose to start in August but they just told me it might now be September. Am not planning to apply for additional borrowing till they actually start building works or if interest rates look like going up.If you haven't found a builder yet it's far too early to be thinking about comitting to a large amount of borrowing regardless of how cheap mortgages are these days.
gangzoom said:
Have you got builders quotes yet? Our builders are suppose to start in August but they just told me it might now be September. Am not planning to apply for additional borrowing till they actually start building works or if interest rates look like going up.
If you haven't found a builder yet it's far too early to be thinking about comitting to a large amount of borrowing regardless of how cheap mortgages are these days.
problem with covid is as soon as ends builders will be hard to find as promised to jobs precovid so likely cost more and will wait longer according to my neighbour who is local builderIf you haven't found a builder yet it's far too early to be thinking about comitting to a large amount of borrowing regardless of how cheap mortgages are these days.
p1doc said:
problem with covid is as soon as ends builders will be hard to find as promised to jobs precovid so likely cost more and will wait longer according to my neighbour who is local builder
Our build quote is already 20% higher than expected thanks to COVID, and that was pre Brexit, so who knows what the final number will be.....But as long as the government keeps interest rate low everyone is happy. I've sort of done this. Borrowed against the house pre-renovation at 80% LTV on a two year tracker, no ERC.
75% of the renovation will be done before the two years are up, at which point we will have a revaluation and borrow again at 65% LTV. Obviously you need to get the timing right so that the house is 'better' at the revaluation points.
75% of the renovation will be done before the two years are up, at which point we will have a revaluation and borrow again at 65% LTV. Obviously you need to get the timing right so that the house is 'better' at the revaluation points.
gangzoom said:
Our build quote is already 20% higher than expected thanks to COVID, and that was pre Brexit, so who knows what the final number will be.....But as long as the government keeps interest rate low everyone is happy.
Why has covid made building more expensive? I know lots of people have wanted rennovations, garden rooms etc, as a result of covid, but would have thought as we come out of that period and people go back to a more normal life then builders would be less in demand?
Condi said:
Why has covid made building more expensive?
I know lots of people have wanted rennovations, garden rooms etc, as a result of covid, but would have thought as we come out of that period and people go back to a more normal life then builders would be less in demand?
No idea why but every builder we spoke to said the same thing, so unless they are in it together it does seem real. I know lots of people have wanted rennovations, garden rooms etc, as a result of covid, but would have thought as we come out of that period and people go back to a more normal life then builders would be less in demand?
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