equity in a house Help understanding ?

baz178

baz178

baz178

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21 Jan 2013
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792
Location
Leeds
Hi, bought a house early this year and completely gutted it and still in the progress of finishing a big single back kitchen extension and a double side extension, with garage and bedroom above.

Obviously when the house his done early next year it will be worth a lot more than I bought it for, also me and my girlfriend have funded the build outsells from own money.

So if I go back to the mortgage company later next year with a valuation a lot higher than what I bought it for, what are the options I can do ?

Kind regards Danny
 
lemonkettaz said:
I'm simple terms I believe it is,

If you bought the house for example of 100k, you do upgrades, you get a valuation of 150k

You pocket the difference plus what you have already paid off of the original mortgage, minus fees and costs of renovation.

But you are now paying a mortgage worth 150k not 100k
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Could you ever take the money out ? Or use it has a deposit to fund another house for example?

Thanks
 
I know that but what will help me it’s only cost me materials for the extensions, has I’m a bricklayer so saved a ton on labour.
 
dLockers said:
The bank will run auto algorithms to re-value the house. Obviously the work you have done won't be "in those algorithms", so you'll have to raise a valuation appeal. You should check what LTV/equity you currently have as the bandings are quite large - IIRC 90% - 80% LTV, then 79% to like 60%. So unless you have like, doubled the house value, or were close to the next boundary anyway, it won't make any difference really.

You may also have to pay for the revaluation. And the bank will prioritise value on structural/location type value levers rather than sq/ft/decoration.
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It should have put on around 125k in value, the open kitchen extension his massive and I’ve added a garage and a extra bedroom above. Was 3 bedroom now 4 bedroom with 2 bathroom which one his a en-suite. Fully upstairs and downstairs underfloor heating, and proper oak skirting boards and architraves through out.
 
dLockers said:
How much is left on your mortgage? What would you value the house at now?
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Only took the mortgage out in January 35 year. Bought the house for 198 same house on street same condition when I bought it sold for 240 last month so they have gone up since January.
 
dLockers said:
You think a builder refurbing his own house has paid VAT anywhere? lol.


So you have a 82% LTV at the moment roughly - if you can get your house valuation up by a "modest by all accounts" £50k then your LTV will be 57.1% which should see a decent "saving" on your mortgage renewal.

Saving in quote marks because all mortgage rates have gone up. So you may find you are paying the same as what you pay now, but that is best case scenario nowadays.

Edit: rough maths, tl;dr get your bank out to revalue it. Sounds like a major improvement.
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Yes been major improvements has it was run down and basically needed a builder to buy it, with the amount of work needed and get it back to its former glory.
 
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