Borrowing more than house is worth.

[bkkvillan]

Hi. I have recently been approved for mortgage. However the house I want to buy is approx €20k less than the amount I have been approved. I was wondering if anyone knows if I can take the full amount I have bee approved for or can I only take what the house is worth? Also if I can, how do I go about it?

Cheers
J

 

[peteb]

No. You can only take 92% or whatever deposit amount they are looking for of the purchasse price of the house.

 

[bugler]

That may have been possible in the boom, but it isn't possible any longer.

 

[jhegarty]

It was never possible. 100% mortgages were the height/worst of the boom.

 

[Bronte]

It was never possible. 100% mortgages were the height/worst of the boom.

I don't know about that for sure. Could you not get money for renovations, stamp duty, furniture etc?

 

[ryaner]

There were 110% mortgages back in the boom years. Most were listed to cover stamp duty but in reality covers more than just that.

 

[IsThisOnFree]

I don't know about that for sure. Could you not get money for renovations, stamp duty, furniture etc?

Yup, that's correct, if you don't draw down your entire mortgage for the purchase (eg, approved for 200k and only use 160k for the purchase of a 175k house) you can possibly draw down the remaining 40k for renovations etc. However, you can only borrow it at a LTV rate of around 70%, and you need to provide the bank with details of works done, costs, invoices etc. So if needed 40K to renovate the property, the bank would only lend you around 28K of this, the other 12K you'd need to pay up yourself.

I'm not strictly speaking from experience here - I've never done this, but I was planning to at one stage, so I know some of what's involved. This was with AIB, I guess other lenders may work things differently. I also can't recall if it was 70% or 75% they were willing to lend, but it was in that sort of region anyway, certainly not 92% (as they would lend for the actual property purchase).

I don't mean to be rude or anything, but do you really want to go borrowing more than you need .......

 

[bugler]

Bronte was actually referring to the borrowing in the past.

AIB still lend 92% of a conservative 75% calculation of the value added to a property by renovations. Though there seems to be confusion over what actually adds value.