Mortgage approved - is the following possible?

alibab

Hi I am in the lucky position to be mortgage aprroved for a certain amount. I have found a property I like and it's a good bit below the amount I am approved for . The house needs some work to it about 10 thousand euro would make it perfect main thing being a garage conversion .

My question is if I got her for price under approval can I go back to bank and say it's such and such a price but needs work of say 10 thousand euros of work and supply builders quote etc . Would they entertain giving the extra 10 thousand which would be still under approval amount to complete work etc . Thanks

The_Conductor

Regardless of what mortgage approval level you have- the lender will lend you X percent of the purchase price of the property. So- if you have mortgage approval for 200k, but the apartment you're buying costs 100k- the bank will give you 85k (being 85% of the purchase price of the property). If you then need to do 10k of remedial work- normally its a term loan, or some other sort of bridging finance you'd organise.

Just because you have mortgage approval of 200k- does not mean the lender will give you 200k (or indeed any sum- other than a maximum of a set percentage of the purchase price of the property in question).

marco_polo

To add to the above I was told recently by a mortgage advisor in one of the banks that the work would have to increase the value of the property by a similar amount, based on a revised valuation including the planned work. What they really care about is that if they had to sell the property the mortgage debt would be entirely covered.

Decent chance of approval if extending the property, but less so if just remodeling the interior etc.

alibab

Thanks for reply it's a 3 bed semi with garage room attached the extra money would be to convert the attached garage and put in a under stairs toilet as only one bathroom upstairs . Will ask the bank also but just wondering if was actually possible at all

jon1981

You really have to prove that you can add capital value to the house for the extra money. It can be painful, getting quotes from builders then valuations from valuers and submitting them to the banks, banks then approve and after that they will give you 75% of the amount you are looking for (AIB anyway).

For example the basic kitchen or bathroom wouldn't be seen by the bank to be adding capital value.

alibab

Thanks again it is a AIB mortgage . Its not a huge issues as none of the work needs immediate attention so think the house is worth it and any further work could be done in the future . Its is in good enough condition to move in immediately