# Lenders attitude to financing house in need of renovation?



## Dee101 (6 Jun 2012)

Hi

Alot of houses we are looking at require renovation / extending. While we initially dismissed the idea of buying such a property as being too much hassle and if we had the choice would prefer a house in "walk in condition", we are now considering it as there are not many houses coming up in the area we want.  If we get one at the right price needing renovation it could work out well for us.

We are loan approved and have a healthy deposit set aside (circa 80k). If we buy a house in need of work we will be keeping a good chunk of this aside to finance all renovations ourselves. (Specifically we envisage, new bathroom, kitchen and utility room extension, new windows, maybe some insulation and general decorating)

Would the fact that we are financing the works ourselves put the lenders at ease? From what I hear, the banks are not keen on financing such properties.  Would they want any kind of guarantee that we would complete the works to a certain standard?

Would what I have outlined above be the right way to go about things with the bank / financing and is there anything else I should consider? (apart from the inevitable heartache and possible pulling of ones hair out that goes along with renovating a house)

Thanks in advance for your help


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## Leo (7 Jun 2012)

The banks shouldn't have a problem with that. They'll satisfy themselves that the amount they're lending you is in line with the value of the property. The fact that you then have money set aside to improve it should be good news to them, as the work should increase the value of the asset.


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## terrysgirl33 (8 Jun 2012)

Are the houses you are looking at in working order, appart from needing renovations?  I think the banks are slow to loan money to houses without a working bathroom and kitchen, but this is based on anecdotal evidence!  If they work, but could really do with being changed, then I think you are OK.


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## Dee101 (8 Jun 2012)

Thanks for the replies. Yep they would be in working order as in with functional bathroom and kitchen - although they would need to be replaced almost right away. Most of the houses are just terribly dated and in need of updated heating, windows and extension. 

Has anyone here who has bought a "fixer upper" any experiences to share? Would you do it again? etc


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## rustbucket (9 Jun 2012)

I bought a fixer upper in 2008 (sigh). From my own personal experience (and this is purely personal- im sure others will disagree) it really depends on how much needs to be done.

As you mentioned above- Kitchen and bathroom are functional. If you are happy with just replacing existing units then thats good. changing design and lay out of both can be costly.

Personally I would do it again, but only if I had the capital to complete *all* the works/upgrades necessary. My current home isnt finished and thats because we ran out of money. We did things in stages which is not cost effective and it didnt really turn out the way we wanted. Its not perfect and there are things that really bug me that if I just had a bit of extra cash at the time could have been totally different.

However, you have quite a sizeable deposit and you have mentioned that you will use a portion of that on the upgrades. As above it depends on the amount of work required.

I think before you buy get a few quotes or ideas of what it would cost you to do the work you want to do. If you can afford for it all to be done at the same time then it sounds like you are in a good position.

Best of luck


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## Dee101 (9 Jun 2012)

Thanks for that rustbucket..Running out of money is one thing I would worry about. Although we do have some money set aside, I know how costs can spiral out of control once you start these things and I think its inevitable that you run over your budget..As you say, it depends on what has to be done and if I do end up having an offer accepted on a house like this I will get an architect and surveyor to take a look at it to give me an idea on costs before going ahead.  Thanks for the advice!


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## geri (11 Jun 2012)

Hi Dee101,
Well, we are currently in the middle of a do-er upper. The house was built in the sixties, so needed complete renovation, and we are adding a double height extension at the back, and double height bay window at the front. The whole house needed re-wiring and re-plumbing. We got an 80% mortgage from KBC and we had approx 100,000 to spend on the doing up. So that's the money part. All sounds simple.
In reality, it has been a Long. Hard. Slog. My husband is project managing, labouring, getting quotes for materials, doing all roofing and wood work. The stress has been incredible, and we have been nearly driven NUTS over it. We will be exactly one year at it from pulling out the first of the old kitchen units, on 01 July. There have been some low moments, with my poor husband coming home covered in muck from head to toe, frozen to the bone, after digging foundations in foul weather back in january for days on end, to dealing with incompetent tradesmen, one in particular who made a complete mess of the plumbing and had to be removed from the job. This all now needs to be rectified. It has also put a strain on our relationship, and we seem to be arguing alot. 
HOWEVER.......I can see light at the end of the tunnel. Unbelieveably, from mounds of muck, dust, flooding, freezing, planning application saga's, I am beginning to see a beautiful house. The really dirty work is finished, we are now just finishing off the wall insulation, and the plasterer is coming next week. I am expecting delivery of my beautiful kitchen, which has just what I want, at the end of the month. I have a utility room! I have a walk in wardrobe !!! The stress levels are dropping, the arguments are falling away. 
So, is it worth it? If you had asked me that three month ago, I would have said no way, why did we ever decide to do this, its driving us all insane. Now - I'm starting to feel that it really was worth all the pain and suffering. My advice to you is to expect that it will be really, really hard, but keep reminding yourself, that it will come to an end and hopefully you will end up with a house that you really love.


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