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Question about Renovations and Mortgage

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  • 13-10-2016 10:48pm
    #1
    HouseHeating
    Registered Users Posts: 14 ✭


    I have question - we talked to bank about getting our mortgage to include an extra amount in order to carry out essential renovations on the house we're buying. Had an valuation carried out and everything appears to be in order.

    However the mortgage adviser said something today about the funds for renovations being held back until work is completed. Is this normally the case? How do we pay someone to do the renovations if the bank is waiting till completion. Is there another valuation done then and what if there's an issue with releasing funds and we have a contractor bill.

    I know I should have asked the adviser but only thought of these things after. Has any one any experience with this previously? Can perhaps explain how this works? Any help is greatly appreciated. :) Thanks!


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    #2
    Tefral
    Registered Users Posts: 4,358 ✭✭✭Tefral


    What happens is with renovations there are two valuations. So they pay out in accordance with the amounts agreed when you started in the self build form, but they hold back the last payment until you submit another valuation showing the completed works add value to the house.

    If it doesnt, they wont give you the money, if it does they will give you the money.


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    #3
    Cona
    Closed Accounts Posts: 591 ✭✭✭Cona


    I am going through a similar process as I understand it as follows:

    You agree on your mortgage house price and also on the renovation funds. For example, house price is 200,000 and renovations are 50,000. First thing is you need to get a valuation done for the bank and the "valuation on completion" of the house needs to be greater than the 250,000 figure you are borrowing. Keep in mind, the bank will only lend up to 90% of the mortage.

    Once works begin, I understand that you need your builder to supply you with an invoice for the works which you can then submit to the bank to draw down the funds. You would probably draw down in 2 stages with a final stage payment held back upon final valuation being carried out and all works complete.


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