Re-Mortgage question

Transform_IT

Transform_IT

Transform_IT

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So a colleague and I were discussing houses this morning. We were talking about his recent extension and I asked if he took a loan out.

He told me he remortgaged his house and used the equity to fund the extension. He put down the reason for his remortgage - home improvements. He only paid £100k for the house 2 years ago and has done little bits here and there. He put down on his application that the value of his house was £120,000 (factoring in the extension, which is to be built with the money borrowed).

The valuer came to his house and agreed to the value of £120,000... :confused: After he explained about the extension etc etc.

I told him this wasn't right, as the bank should only lend/remortgage on the current value. He disagreed and said you can remortgage for home improvements you plan to do. What also went in his favour was the recent sold prices in his area. 5 houses on his street, identical to his, have sold within the last 3 years for over £120,000.

However I still don't believe you can lend on future improvements?

Who is right or does it depend on the bank?

Thanks,

T_IT
 
it will depend on the mortgage provider, there is no legal rules here, so it's at the descrection of the mortgage company I think.
 
Surely they've just revalued it in it's current state at 120k and your wires have gotten crossed somewhere. If other properties that are exactly the same as his in it's current state have been selling for 120k then he's doing something bad if his is only worth that after an extension.

You can extended a mortgage and use the funds for home improvements but the amount is based on the house in it's current state.

http://hoa.org.uk/advice/guides-for...ow-can-i-finance-my-home-improvement-project/
 
psd99 said:
why does it bother you so much?

120K for a house, what is it a wendy house? lol
Click to expand...

92k here ;)

3 bed
garage
driveway
front and back garden


to OP, I believe you can borrow what the house is valued at. but i may be proven wrong certain banks do this but not for first time buyers
 
tom_e said:
Surely they've just revalued it in it's current state at 120k and your wires have gotten crossed somewhere. If other properties that are exactly the same as his in it's current state have been selling for 120k then he's doing something bad if his is only worth that after an extension.

You can extended a mortgage and use the funds for home improvements but the amount is based on the house in it's current state.

http://hoa.org.uk/advice/guides-for...ow-can-i-finance-my-home-improvement-project/
Click to expand...

Sorry I wasn't clear. He paid £100,000 for it just over 2 years ago. It was a right state. Hes since, redecorated small bedroom, lounge and had a huge kitchen fitted and added bits here and there. The problem is half of it is still a building site and he has remortgaged to fund the rest of the renovations and extension. The other houses on the street have sold for £120,000 - £135,000 depending on the condition. My point is, as it stands without the extension and current state, it isn't worth £120,000, maybe £105,000 - £110,000 at best. But the valuer said it was fine, listened to his plans and was happy with the value of £120,000. He got his money to fund his extension and renovation work and the house will be worth £130,000+ after this is complete. However, what he did have was a valuation from an estate agent of current state and with the work done. Also, he had quotes from the tradesmen for the work to be carried out and showed all of these to the valuer.

My point is, I thought you could only remortgage upto the value of the property in its current state. The reason I want to check is, we want an extension however the quotes would mean we would need to borrow more than what are house is worth at the moment. But after the extension, it would increase the value.

Thanks,
 
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Do they not stipulate that certain works must be completed within a certain time frame and release the money at various times? When you fail to do so, no more cash.
 
McGray said:
:eek:
Click to expand...

:) The house with an extension and loft conversion would increase our value by over £50,000 judging by the recent sold prices on our road of houses identical. However, without it isn't worth that. It is a high cost rent area here, and all of the houses are bought and converted into flats or just rented out, meaning the more space the higher the rent. Hence the reason the 5 bedroom houses which have had conversion and extensions are selling for £160,000 on our street, yet we paid £106,000 for ours.
 
Transform_IT said:
Sorry I wasn't clear. He paid £100,000 for it just over 2 years ago. It was a right state. Hes since, redecorated small bedroom, lounge and had a huge kitchen fitted and added bits here and there. The problem is half of it is still a building site and he has remortgaged to fund the rest of the renovations and extension. The other houses on the street have sold for £120,000 - £135,000 depending on the condition. My point is, as it stands without the extension and current state, it isn't worth £120,000, maybe £105,000 - £110,000 at best. But the valuer said it was fine, listened to his plans and was happy with the value of £120,000. He got his money to fund his extension and renovation work and the house will be worth £130,000+ after this is complete. However, what he did have was a valuation from an estate agent of current state and with the work done. Also, he had quotes from the tradesmen for the work to be carried out and showed all of these to the valuer.

My point is, I thought you could only remortgage upto the value of the property in its current state. The reason I want to check is, we want an extension however the quotes would mean we would need to borrow more than what are house is worth at the moment. But after the extension, it would increase the value.

Thanks,
Click to expand...

I repeat:

it will depend on the mortgage provider, there is no legal rules here, so it's at the descrection of the mortgage company I think.
 
Ace Modder said:
I repeat:

it will depend on the mortgage provider, there is no legal rules here, so it's at the descrection of the mortgage company I think.
Click to expand...

Got you. I'll phone my bank tonight and speak with them, as we have wanted to to the loft conversion and extension for a long time but would need a little more equity than we currently have.
 
Transform_IT said:
Sorry I wasn't clear. He paid £100,000 for it just over 2 years ago. It was a right state. Hes since, redecorated small bedroom, lounge and had a huge kitchen fitted and added bits here and there. The problem is half of it is still a building site and he has remortgaged to fund the rest of the renovations and extension. The other houses on the street have sold for £120,000 - £135,000 depending on the condition. My point is, as it stands without the extension and current state, it isn't worth £120,000, maybe £105,000 - £110,000 at best. But the valuer said it was fine, listened to his plans and was happy with the value of £120,000. He got his money to fund his extension and renovation work and the house will be worth £130,000+ after this is complete. However, what he did have was a valuation from an estate agent of current state and with the work done. Also, he had quotes from the tradesmen for the work to be carried out and showed all of these to the valuer.

My point is, I thought you could only remortgage upto the value of the property in its current state. The reason I want to check is, we want an extension however the quotes would mean we would need to borrow more than what are house is worth at the moment. But after the extension, it would increase the value.

Thanks,
Click to expand...

If you need to borrow more than what the house is worth, forgive me for being blunt by why don't you just buy an appropriately sized house???!
 
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