Mortgage + renovation loan

Hi
I was recently told by my bank I should qualify for mortgage for 250k to 300k to trade up from my current house

We have savings of approx 100k

Have seen a house I might be interested @ 250k but i would want too fully renovate it. Cost of renovation to the standard Id want would be 100 - 150k, for arguments sake say 100k

If I mortgage the house at 200k plus my 20% of 50k, that will leave me with 50k of my own money but I will need another 50k for renovation

Will/Can the banks offer me the extra 50k at the same term/rate as the 200k mortgage???

Or will they just offer me the 50k as some type of home improver loan, with much higher rate and shorter term (which I don't want) I simply want a mortgage of 250k (which 50k will go towards renovations) and 100k of my own money to cover my 20% and also renovations

Any help appreciated...
Thank you

Then you need to apply for a mortgage based on the renovated value of the house rather than the purchase price. You will be looking for the 250k and you would have to submit detailed info of the work you intend to do as this will need to be passed to the valuer. It will hinge on what the valuer determines the value of the renovated house will be. You're not looking to do a straight purchase, it's vaguely similar to building a house.

If the bank goes with it then they will release probably 80/90% of purchase price to allow you complete purchase along with your own funds, then you will draw down the renovation money in stage payments maybe as the work is done. It all depends of course what sort of renovation you mean and how easy it would be to get estimates/builders quotes etc. Estimates for carpets/curtains/paint etc won't do as they won't add value.

Ok, great, this is exactly what I was hoping for but was unsure that the banks would do this.

So it should be possible for me to apply for a 250k mortgage for a house that WILL be valued at 350k after renovation costs, but will have to draw down the renovations costs in stages

If I was to go ahead I would be employing a architect, and advise/quotes from QS/builders for work required, and drawing down money in stages would also be fine.

Yes, that would be the way it should be done, now whether the bank will go for this or not is another thing. This was very common in the past, they have probably tightened up a lot on this so it will all depend on the bank's valuers projected valuation on completion of work.

If you will have an architect then they will be able to provide certs for stage payment drawdowns, just remember you will always be working in arrears, you will have to get the work done first then draw down the stage payment with the final payment held until all works are completed.

I had a friend who did this recently. In his case, KBC was the only bank that would do this. As far as I know, they insisted he used an architect and employ a contractor to do all the work.