When your property needs improvement or renovation, there is a high chance that you will need a loan. If the property is inhabitable, you will need to approach a specialist lender (given that most of the high street lenders will only consider loaning for a habitable home). However, some will offer a loan. If you are in this situation, visit Newcastle Permanent for fixed rate home loans.
Raising finance to renovate a habitable home
It is easy to get a loan for a habitable home that needs improvement. Most lenders, for instance, will offer 80-95 percent of the home value. However, a retention fee will sometimes be withheld pending completion of important repairs. A surveyor will be sent to survey the house and recommend repairs. The house will then be re-inspected and the balance will be released. This may also call for a fee. Before you get the retention fee released, you will need to use other sources of funding for repairs. Common repairs considered here include damp proofing, rewiring, roof repairs and heating system repairs.
Financing non-habitable homes
The number of lenders willing to finance repairs for a home that is not habitable is limited. Most lenders will give you 60-90 percent of the value of the home before any renovation. You will need to approach a specialist lender who will offer the loan willingly. More funds will be released as the renovations continue. For the funds to be released, a lender’s valuer will have to re-inspect the property. However, you may get an interim inspection certificate from a specialist, which will allow you to keep the funds from being released in stages.
To start renovations and to keep them going before the funds are released in stages, usually calls for savings or loans from friends and family. However, some specialist lenders will offer you the stage payments in advance. High street banks also offer loans for inhabitable home renovations. However, they start by offering limited funds and proceed as the renovation continues. Once the property has been fully renovated, the owner can refinance to pay other loans. Most lenders will offer up to 90 percent of the house’s market value, so it really depends on which way you want to go about your renovations.
How to borrow
The amount a lender will be willing to lend you will depend on the calculated multiple of your gross income. The lender will assess your disposable income and adjust the loan limit accordingly. Those who are self-employed or only work part time may find it a challenge to convince the lenders unless their earnings are quite high. However, a broker will direct you to the right lender. If you are self-employed, you can try a few banks as some accept individuals with their own businesses if they can prove their regular income. Adverse credit history will affect your chances of being accepted so check your credit report before you try. If you don’t have a good credit report you will more that likely need an advisor to handle your application.
Finding a deposit
Lenders will offer you 60-90 percent of the property’s market value. This means that you must find the rest to kick-start the project. You can fund the deposit of about 15-30 percent from savings, sale of assets, re-mortgaging, taking a bridging loan or taking a personal loan. You can also get contributions from friends.
Choosing the best lender is key to the success of your renovations. Take your time, perform a due diligence on a number of lenders and finally pinpoint the best.