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You may find yourself in a situation where you require a renovation mortgage. It could be you want to buy a run down property and take on the project of renovating it. Or you wish to carry out sizable repairs on your own property. Or perhaps make improvements to your own home to increase it’s value. There are many factors to consider before taking on a risky project of that scale and financing is likely the most important aspect to focus on. If you don’t already have the funds saved for the work, you may require a renovation mortgage.
Where to get a renovation mortgage?
You may have seen a property that needs work but has great potential or you wish to increase the value of your own property and need capital to carry out the work. You will need a type of mortgage that is specific for these purposes called renovation mortgages.
As with any type of mortgage loan, lenders will need to assess applications on an individual basis and take into account your affordability and whether you have the ability to make the monthly mortgage payments. They will also check your credit score or credit history to ensure you are a reliable borrower although there are some exceptions depending on the lender and their requirements.
Other factors to consider when sourcing a lender for a loan is if you already own the property, how much work and money is required, whether the property is habitable and how quickly you require financing. A habitable property is one that is considered to be liveable and has basic features such as a roof and walls and a working kitchen and bathroom. You may find it more difficult to borrow a high loan to value ratio if your property is inhabitable. There may be conditions which lenders will stipulate as part of their agreement to lend such as withholding funds until they are happy with aspects of work are completed.
Not all lenders are willing to offer loans for properties that require renovation so you might need to look at specialist lenders with experience with renovations and this type of loans. If can lend, they might not be able to loan the amount to cover the costs of the renovations which would mean you would need to have something in place to cover the cost of the building work along with other associated costs. Some lenders may cover the cost of the building work but only when the property is revalued and remortgaged after the renovation is complete. It is essential to find lenders and deals suited to your individual needs and situation.
Carrying out renovations, especially extensive changes is not a simple process and there are many elements to consider before committing yourself to such a task. It is best to prepare and contemplate carefully before applying to a lender for a renovation mortgage as they will also need to see a strong application to increase your chances of being accepted for a loan.
Other things to consider
Smaller projects may not require planning permission but it is of huge importance when it comes to carrying out extensive work on a property. You’ll need consent from your local authority and this can take time for approval or issues may arise causing your application to be rejected. It is wise to check how easy it would be for your submission to accepted.
You may be able to find older properties for a cheap price but they may require more work to bring up to date so it is wise to make sure the renovation is worth doing. Renovating old buildings in using miscalculated techniques could cause further damage and create issues when it comes to getting buildings insurance.
It is important to figure not only your renovation mortgage financing but other costs associated with completing a renovation project such as surveys, design fees, building work costs and it is sensible to have cash set aside for unforeseen circumstances. Often building work can cost more than originally estimated and not having a cushion to fall back on mid-way through a project can end up with you being in a difficult position.
Finding a lender who would be willing to lend for renovations isn’t as easy some other types of property financing and not all high street lenders offer products for this type of loan. By using professional services such as ourselves will save you time and direct you to the lenders and deals most appropriate for your needs and circumstances. Get in touch today if you are looking for a renovation mortgage and we will be happy to help.