Buy now for cash, apply for mortgage later...

[Rater]

Has anyone done this? Say you buy a house that needs 80-100k work for 100K cash. Having asked around (mortage brokers and in-house mortgage advisors) you are eligible for a mortgage of around 120k. Will they lend you the 80 to 100 for renovations after the cash purchase? Or would that be madness? Should you get your approval in principal first before even dreaming of buying for cash?

 

[music]

Hi,
I think that would your tentative plan would be very risky. According to recent conversations I have had with several of the main banks, they are not lending for renovations. You have to initially fund the renovations yourself, and the bank needs the relevatn signed off architects/engineers certificites at each building / renovation stage. When that is completed they will then advance you the monies for the renovations.

 

[leonmahon]

Getting a mortgage for the house purchase and then spending your cash on the renovations is the way to go, not the other way round.

 

[Rater]

Hi folks. Thanks for the replies. And just to expand: I was advised this week by EBS that no mortgage would be granted for renovations if the property is, according to them, "uninhabitable". However, in theory, if you have bought for cash, they will grant a mortgage afterwards in stages as work progresses and they get architects plans etc. and it is deemed that the work is adding value to the house, and the LTV is still within the necessary boundaries etc. I put this scenario to an advisor, they spoke to the underwriters and I was told it was possible. Quite a headache though, I think, and getting a mortgage, particularly nowadays, is stressful enough. Also, given the fact that any institution that is actually lending seems to look for any excuse not to lend, from what I've read/been told etc., it does seem very risky. I agree that getting a mortgage to buy the property and then using your own cash to renovate is the best approach. Again, thanks for the replies, and if anyone one else has any further info on this (I bet that when you get in to this one on a case by case basis it could prove a bit of a minefield), then please do share.