Buying to renovate/extend - judging the numbers

Second Captain

Hi all,

I've been reading this forum and others for a while now but first time posting. I know you won’t be gentle! :P

I have always rented as an adult to date but have very good savings built up and want to buy a long-term home at some stage. I’m in no mad rush to plunge into a house purchase just yet with the way things are going but I am beginning to track prices carefully on the particular kind of property that I am interested in. Basically, I am looking at small mostly single story older houses that probably have or need renovation inside and an extension to provide a modern living space. If the work has been done already, all the better, but most of what I see I would need to get builders in after purchase to knock it into shape in a significant way.

The problem is I am at a bit of a loss as to how I am supposed to estimate with any reliability what I would need to spend as a minimum on extending/renovating any given property and so I cannot easily tell if the purchase price of the property is within my reach (regardless of whether it has bottomed out or not). How do you judge things like required structural work on a property you don’t own yet? Do you bring an architect and engineer to every viewing?

Also, how does this play out in the mortgage application? If I was to apply for a loan for a non-over-valued small house in turn-key condition today, I’m sure I’d be approved as my savings would be a large percentage of the purchase price thus minimising their risk but if it’s a case of buying a property to improve it, how do the banks currently look on this prospect where the amount they’re being asked for might be nearer the full purchase price of the property as is with my savings earmarked for doing a major job on it?

Any insight welcome, particularly if you’ve been through these hoops recently.

-2C