Can't access mortgage funds

Weeshie

We have just closed the sale of a builders finish property. The mortgage includes €35k to complete/renovate/furnish the house, with funds being made available as the work is completed. However, all our money went into the deposit so we can't get work started. Any advice on how we can get around this? Will tradesmen issue invoices after the work is done and wait for their payment until such time as the bank releases the funding to us?

blacklilly

Firstly you will need to speak with the trademen and discuss payment terms with them.
I'm not entirely sure how the bank will operate with regards to access to funds, however perhaps if quotations for work were given to the bank they may release some funds prior top work being completed, maybe someone else could confirm this.

Weeshie

Many thanks Blacklilly, some good ideas there. Any other suggestions also welcome :-)

quadrifoglio verde

Personal loan might be an option?
I can't see tradesmen being too eager to do work on the promise that the banks give the mortgage. They're fecked then if the bank doesn't.

braddun

did you give the bank a completion notice,from the builder

davo10

braddun wrote: »

did you give the bank a completion notice,from the builder

What a coincidence, I was talking to two builder friends at the weekend, one said he had just been stung for over €30k in just such a situation. House owner was temporarily laid off and bank refused to release any more funds for house until he was back in full time employment. The other said under no circumstances would he do building work where the owner was relying on a bank, both said in future at least a third had to be paid up front. Amazingly (but I suppose not really), neither are now interested in tendering for big jobs/house builds, they said they are much more likely to be paid for small/extension jobs in the €30-€50k bracket.

OP explain to the bank that they have already given you a mortgage, for a house you can't live in, they are on the hook already. Bring your agreed contract for cost of build to them and ask them to release funds in stages, show this letter from bank to builder but it's very important that you budget for at least 10% more than the builder quoted so that you have wriggle room if any changes want to be made, unforeseen problems arise.

DrBass

We are also in the process of buying a builders finish property. We had been told that the bank would lend us the money for completion, Kitchen, Flooring, Tiling things that would add value, making the house worth more in value in repair. They would lend up to 90% value in repair and there would be a 'holdback of funds' until the banks surveyor came out again and said yes, value in repair is now x, and the issue the cheque for the work completed.

Furnishing the house does not add value in the banks eyes, mirrors, sofas, beds etc.

What they did not tell us is that we would actually need pretty much need all of this money upfront ourselves on top of deposit and fees to complete the house. If they had told us this from the start we may not have went ahead with buying the house, but we really like it. We estimated a minimum cost of completion of 25k. In the end we were getting no where with the bank on this. So we had to find another 15k and tell the bank that we felt that this would be enough to finish the house and that we would do the rest over time. They agreed.

Probably your best bet as already said would be to take out a short term 'home improvement' loan, Credit Union etc.

When the banks valuer went to view the house, did he value it at 35k less than the sale agreed price?

bombadil

Hi there

I was in a similar situation two years ago when we purchased a part finished property.

When it comes to finishing the house the bank will not give a draw down of funds until the architect has signed off that the works have been fully completed for that stage of the project (in our case min draw down was 10,000).

Even in these times most builders etc. are very familiar with this process, and though some payment is preferred up front, will work with you on this. It is perfecly normal to leave payment until the works are completed... just dont leave anybody waiting!