A lot of people get caught out and realise part way through major home improvements that they need to raise extra cash. Here’s a few tips.
Your house may be in lovely condition but as soon as you start knocking it about its value goes down before it goes up. If you have a half built extension or your internal fittings have been ripped out the valuer may find the property less desirable than before you started the work. This is because less people are likely to buy it as a part completed project. If the valuation is lower, the lending you can get may be lower or the rates higher so think about this before you start.
Beware taking out the bathroom or kitchen. Once you do this the property is officially “unmortgageable” and it’s at this precise moment when many borrowers realise they are short of cash and apply for a secured loan.
Also if you totally move out of the property some lenders start to get nervous that you won’t move back
Firstly you should know that we have arranged home improvement loans where there is no bathroom or kitchen and nobody living in the house but the choice of lenders is more limited and it’s a tougher challenge.
Also to make the property “mortgageable” you only need a working cooker and sink in the kitchen and a toilet in the house – it doesn’t matter how rough they are so some people have put in temporary fittings to get the loan agreed.
The best solution is to properly plan your finances before you start. Think carefully before you remove the kitchen or bathroom and if in doubt talk to an adviser about the options.